12th | Ts grewal 2022-2023 Question 17 to 20 | Share Capital - Company Accounting

Question 17:


Eastern Company Limited , having an authorised capital of  ` 10,00,000 divided into shares of  `  10 each , issued 50,000 shares at a premium of  `  3 per share payable as follows:

 On Application

     ` 3 per share;

 On Allotment (including premium)

    ` 5 per share;

 On first call (due three months after allotment)

and the balance as when required.

    ` 3 per share;
 


Applications were received for 60,000 shares and the directors allotted the shares as follows:
(i) Applicants for 40,000 shares received in full.
(ii) Applicants for 15,000 shares received an allotment of 8,000 shares.
(iii) Applicants for 5,000 shares received 2,000 shares on allotment, excess money being returned.
All amounts due on allotment were received.
The first call was made and the money was received except on 100 shares.
Give journal and cash book entries to record these transactions of the company. Also prepare the Balance Sheet of the company.

Answer:


Books of Eastern Company Limited

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

Bank A/c

 To Share Application a/c

(share application money  received)

Dr.

 

1,80,000

 

1,80,000

 

Share Application A/c           

Dr.

 

1,80,000

 

 

  To Share Capital A/c

 

 

1,50,000

 

  To Share Allotment A/c

  To Bank A/c

 

 

27,000

3,000

 

(Share Application money for 50,000 shares transferred To Share Capital Account and the excess money transferred To Share Allotment Account)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

2,50,000

 

 

  To Share Capital A/c

 

 

1,00,000

 

  To Share Premium A/c

 

 

1,50,000

 

(Allotment money due on 50,000 shares @  `5 per share including  `3 security premium)

 

 

 

 

                               

 

 

 

 

Bank A/c (2,50,000-27,000)                Dr.

To Share Allotment A/c

(Share allotment money  received)

 

2,23,000

 

2,23,000

 

Share First Call A/c

Dr.

 

1,50,000

 

 

  To Share Capital A/c

 

 

 

1,50,000

 

(First call due on 50,000 shares @  `3 per share)

 

 

 

 

 

Bank A/c

(1,50,000-[100×3])

 To Share First Call A/c

(Amount received on first call except 100 shares)

               Dr.

 

1,49,700

 

1,49,700

 

Cash Book (Bank Column)

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

 

Share Application

 

1,80,000

 

 Share Application

 

 3,000

 

Share Allotment

 

2,23,000

 

Balance c/d

 

5,49,700

 

Share First Call

 

1,49,700

 

 

 

 

 

 

 

5,49,700

 

 

 

5,49,700

 

 

 

 

 

 

 

 


 

Eastern Company Limited

Balance Sheet

Particulars

Note No.

 ( `)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

3,99,700

b. Reserves and Surplus

2

1,50,000

2. Non–Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

5,49,700

II. Assets

 

 

1. Non–Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

5,49,700

Total

 

5,49,700

 

 

 


NOTES TO ACCOUNTS

Note No.

Particulars

 ( `)

1

Share Capital

 

 

Authorised Share Capital

 

 

1,00,000 shares of  ` 10 each

10,00,000

 

Issued Share Capital

 

 

 50,000 shares of  ` 10 each

5,00,000

 

Subscribed, Called up and Paid up Share Capital

 

 

 50,000 shares of  ` 10 each,  ` 8 called–up

4,00,000

 

 

 Less: Calls–in–Arrears

     (300)

3,99,700

2

Reserves and Surplus

 

 

Securities Premium

1,50,000

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

5,49,700

 

Table Adjusting Application money

Shares allotted

Shares applied

Application money receive

Share Capital

Share Allotment

Refund

40,000

40,000

1,20,000

1,20,000

-

-

15,000

8,000

45,000

24,000

21,000

-

5,000

2,000

15,000

6,000

6,000

3,000

60,000

50,000

1,80,000

1,50,000

27,000

3,000

 

Question 18:


Tiny Toys Ltd. issued  ` 10,00,000 shares of  ` 100 each at a premium of  ` 20 for subscription payable as:

 ` 10 per share on application,
 ` 40 per share and  ` 10 premium on allotment, and
 ` 50 per share and  ` 10 premium on final payment.

Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received.
Pass necessary entries in the company's books to record the above transactions. Also, prepare company's Balance Sheet on completion of the above transactions.

 

Answer:


Amount payable as:

Application

 `

10

 

Allotment

 `

50

(40 + 10)

First and Final Call

 `

60

(50 + 10)

 

 

120

(100 + 20)

 

Books of Tiny Toys Limited

Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

 

 

 

 

 

Bank A/c

Dr.

 

2,30,000

 

 

To Share Application A/c

 

 

2,30,000

 

(Share application money received for 23,000 shares at  ` 10 each)

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

2,30,000

 

 

To Share Capital A/c

 

 

1,00,000

 

To Share Allotment A/c

 

 

50,000

 

To Bank A/c

 

 

80,000

 

(Share application of 10,000 shares transferred to Share Capital,  ` 50,000 adjusted on allotment and remaining amount returned)

 

 

 

 

 

 

 

 

 

Share Allotment A/c

Dr.

 

5,00,000

 

 

To Share Capital A/c

 

 

4,00,000

 

To Securities Premium A/c

 

 

1,00,000

 

(Share allotment due on 10,000 shares at  ` 50 each including  ` 10 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,50,000

 

 

To Share Allotment A/c

 

 

4,50,000

 

(Share allotment money received)

 

 

 

 

 

 

 

 

 

Share First and Final Call A/c

Dr.

 

6,00,000

 

 

To Share Capital A/c

 

 

5,00,000

 

To Securities Premium A/c

 

 

1,00,000

 

(First and final call due on 10,000 shares at  ` 60 each including  ` 10 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

6,00,000

 

 

To Share First and Final Call A/c

 

 

6,00,000

 

(Share first and final call money received)

 

 

 

 

 

 

 

 

 

Posting in the Company's Balance Sheet

Tiny Toys Limited

Balance Sheet

Particulars

Note No.

 ( `)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

a. Share Capital

1

10,00,000

b. Reserves and Surplus

2

2,00,000

2. Non-Current Liabilities

 

 

3. Current Liabilities

 

 

Total

 

12,00,000

II. Assets

 

 

1.Non-Current Assets

 

 

2.Current Assets

 

 

a. Cash and Cash Equivalents

3

12,00,000

Total

 

12,00,000

 

 

 

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

 ( `)

1

Share Capital

 

 

Authorised Share Capital

 

 

……  shares of  ` 100 each

-

 

Issued Share Capital

 

 

 10,000 shares of  ` 100 each

10,00,000

 

Subscribed, Called up and Paid up Share Capital

 

 

 10,000 shares of  ` 100 each

10,00,000

 

 

 

2

Reserves and Surplus

 

 

Securities Premium

2,00,000

 

 

 

3

Cash and Cash Equivalents

 

 

Cash at Bank

12,00,000

 

 

 

 

Working Notes:

Applied

Shares

Issued

Shares

Money received on Application

@  ` 10 each

Money transferred to Share Capital

@  ` 10 each

Excess

Allotment due

 @  ` 50 each

Excess money adjusted on Allotment

Excess money after Allotment

12,000

 

1,000

 

1,20,000

 

10,000

 

1,10,000

 

50,000

 

50,000

 

60,000 (return)

2,000

NIL

20,000

–

20,000 (return)

 

 

 

9,000

9,000

90,000

90,000

–

4,50,000

–

–

23,000

10,000

2,30,000

1,00,000

 

5,00,000

50,000

60,000

 

Share Allotment due (10,000 share ×  ` 50)

5,00,000

Less: Excess application money adjusted on allotment

50,000

Money received on Allotment

4,50,000

 

Question 19:


Sugandh Ltd. issued 60,000 shares of  ` 10 each at a premium of  ` 2 per share payable as  ` 3 on application,  ` 5(including premium) on allotment and the balance on first and final call. Applications were received for 92,000 shares. The Directors resolved to allot as:

      (i)

      Applicants of 40,000 shares

 30,000 shares,

      (ii)

     Applicants of 50,000 shares

 30,000 shares,

      (iii)

    Applicants of 2,000 shares

 Nil.


Mohan, who had applied for 800 shares in Category
(i) and Sohan, who was allotted 600 shares in Category
(ii) failed to pay the allotment money. Calculate amount received on allotment.

 

Answer:


 

Issued Shares

60,000

Less: Applied Shares

92,000

Over-subscribed Shares

32,000

Payable as:

 `

3

on Application

 

 `

5

on Allotment (Including  ` 2 premium)

 

 `

4

on First and Final Call

 

 `

12

(10 + 2)

 

  

 

 

 

 

 

 

Applied

Allotted

Money Received on Application

@  ` 3

Money adjusted on Appliction

@  ` 3

Excess

Allotment due

@  ` 5

Excess money adjusted on Allotment

@  ` 5

40,000

­30,000

1,20,000

90,000

30,000

1,50,000

30,000

50,000

30,000

1,50,000

90,000

60,000

1,50,000

60,000

2,000

NIL

6,000

–

6,000

 

 

 

 

 

 

 (Bank)

 

 

92,000

60,000

2,76,000

1,80,000

 

3,00,000

90,000

 

 

Mohan

Number of shares allotted to Mohan=30,000/40,000×800= 600 shares

Money Received on Application 800×3

=

2,400

Application money adjusted to Share Capital 600×3

=

1,800

Execs Money on Application

=

600

 

 

 

Allotment due on 600 shares ×  ` 5

=

3,000

Less: Adjustment of excess money on application

=

600

Calls-in-Arrears by Mohan

 

2,400

Sohan

Number of shares allotted to Sohan=50,000/30,000×600= 1000 shares

Money received on Application 1,000×3

=

3,000

Application money adjusted to Share Capital 600×3

=

1,800

Excess money on application

=

1,200

 

 

 

Allotment due on 600 Shares ×  ` 5

=

3,000

Less: Adjustment of excess money on application

=

1,200

Calls-in-Arrears by Sohan

=

1,800

 

 

 

Allotment due on 60,000 shares ×  ` 5

=

3,00,000

Less: Excess Application money adjusted on Allotment

=

90,000

 

 

2,10,000

Less: Calls-in-Arrears by Mohan

=

2,400

Less: Calls-in-Arrears by Sohan

=

1,800

Money received on allotment

=

2,05,800

 

Question 20:


Sony Media Ltd.issued 50,000 shares  of  ` 10 each payable   ` 3 on application ,  ` 4 on allotment and balance on first and final call . Applications were received for 1,00,000 shares and allotment was made as follows :
(i) Applicants for 60,000 shares were allotted 30,000 shares,
(ii) Applicants for 40,000 shares were allotted 20,000 shares,
Anupam to whom 1,000 shares were allotted from category
(i) failed to pay the allotment money.
Pass journal entries up to allotment .

Answer:


Journal

Date

Particulars

L.F.

Debit

( `)

Credit

( `)

 

Bank A/c (1,00,000 × 3)

Dr.

 

3,00,000

 

 

  To Share Application A/c

 

 

 

3,00,000

 

(Received application money on 1,00,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Share Application A/c

Dr.

 

3,00,000

 

 

  To Share Capital A/c (50,000 × 3)

 

 

 

1,50,000

 

  To Share Allotment A/c

 

 

 

1,50,000

 

(Transfer of application money to Share Capital)

 

 

 

 

 

 

 

 

 

 

 

Share Allotment A/c (50,000 × 4)

Dr.

 

2,00,000

 

 

  To Share Capital A/c

 

 

 

2,00,000

 

Allotment due on 50,000 shares)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (W.N. 1)

Dr.

 

49,000

 

 

  To Share Allotment A/c

 

 

 

49,000

 

(Allotment money received after adjustment of excess on application and arrears)

 

 

 

 

 

 

 

 

 


Working Notes:

1) Computation of amount received on allotment:

 

Allotment due (50,000 × 4)

=

 `. 2,00,000

  Less: Amount received on application in excess (on 50,000 shares @  ` . 3 each)

=

 `. 1,50,000

 

 

 `. 50,000

  Less: Amount due but not received on shares of Anupam

 

1,000

 

 

 `. 49,000

2)  Calculation of Amount not Received on the shares of Anupam

Shares allotted to Anupam=1,000

Shares applied by Anupam=1,000×60,000/30,000=2,000

Amount due on allotment of Anupam's Share (4 × 1,000)

=

4,000

  Less: Excess received on application (3 × 2,000 – 3 × 1,000)

=

3,000

 

 

1,000

 

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Chapter-9: Company Accounting-Share Capital  | 2022-2023

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