Volume-2 | Chapter-1 | Question 36 to 40 | Issue of Share Capital | Ts grewal solution 2020-21 | Class-12th

Page No 8.116:

Question 36:

Sure Ltd. purchased a running business from M/s. Rai Brothers for a sum of  ` 15,00,000 payable  ` 12,00,000 in fully paid shares of  ` 10 each  and balance through cheque.

The  assets and liabilities consisted of the following:

Plant and     Machinery	` 4,00,000	Stock	` 4,00,000
Building	` 4,00,000	Cash	` 3,00,000
Sundry Debtors	` 3,00,000	Sundry Creditors	` 2,00,000

You are required to pass necessary Journal entries in the company's books.

Answer:

Books of Sure Ltd. Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount  ( `)
	Plant and Machinery	Dr.		4,00,000
	Building A/c	Dr.		4,00,000
	Sundry Debtors A/c	Dr.		3,00,000
	Stock A/c	Dr.		4,00,000
	Cash A/c	Dr.		3,00,000
	To Sundry Creditors A/c				2,00,000
	To M/s Rai Brothers				15,00,000
	To Capital Reserve A/c				1,00,000
	(Business of M/s Rai Brothers took over)
	M/s Rai Brothers	Dr.		12,00,000
	To Share Capital A/c				12,00,000
	(Shares issued to M/s Rai Brothers)
	M/S Rai Brothers	Dr.		3,00,000
	To Bank A/c				3,00,000
	(Payment made to M/s Rai Brothers through cheque)

Page No 8.116:

Question 37:

Sandesh Ltd. took over the assets of  ` 7,00,000 and liabilities of    ` 2,00,000 from Sanchar Ltd. for a purchase consideration of   ` 4,59,500.   ` 8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of   ` 10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.

Answer:

Sandesh Ltd. Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
(i)	Sundry Assets A/c	Dr.		7,00,000
	To Sundry Liabilities A/c				2,00,000
	To Sanchar Ltd.				4,59,500
	To Capital Reserve A/c				40,500
	(Purchase of assets and liabilities of Sanchar Ltd.)
(ii)	Sanchar Ltd.	Dr.		4,59,500
	To Equity Share Capital A/c				4,10,000
	To Securities Premium A/c				41,000
	To Bank A/c				8,500
	(41,000 Equity Shares issued of  ` 10 each at a premium of Re 1 per share and  ` 8,500 by bank draft)

 

Working Notes:

WN1: Calculation of Number of Equity Shares

Number of shares issued= Purchaese consideration/issue price=4,51,000/11=41,000

Page No 8.116:

Question 38:

Better Prospect Ltd. acquired land costing   ` 1,00,000 and in payment allotted 1,000 Equity Shares of   ` 100 each as fully paid. Further, the company issued 4,000 Equity Shares to public . The shares were payable as:   ` 30 on application ;   ` 30 on allotment;   ` 40 on first and final call.
Applications were received for all shares which were allotted . All the money was received except the call on 200 shares.
Pass journal entries and prepare Balance Sheet of the company. 

Answer:

Issued to public payable as:

`	30	on application
`	30	on allotment
`	40	first and final call
`	100	Called-up

 

Books of Better Prospect Ltd. Journal
Date	Particulars		L.F.	Debit Amount   `	Credit Amount   `
	Land A/c	Dr.		1,00,000
	To Vendor				1,00,000
	(Land purchased from the vendor)
	Vendor	Dr.		1,00,000
	To Equity Share Capital A/c				1,00,000
	(1,000 equity of  ` 100 each issued to Vendor)
	Bank A/c	Dr.		1,20,000
	To Equity Share Application A/c				1,20,000
	(Share Application money received for 4,000 equity shares at  ` 30 per share)
	Equity Share Application A/c			1,20,000
	To Equity Share Capital	Dr.			1,20,000
	(Share Application money of 4,000 shares transferred to Equity Share Capital Account)
	Equity Share Allotment A/c	Dr.		1,20,000
	To Equity Share Capital A/c				1,20,000
	(Share allotment due on 4,000 equity shares of  ` 30 each)
	Bank A/c	Dr.		1,20,000
	To Share Allotment A/c				1,20,000
	(Share allotment received for 4,000 shares at  ` 30 per share)
	Share First and Final Call A/c	Dr.		1,60,000
	To Equity Share Capital A/c				1,60,000
	(First and final call due on 4,000 equity shares at 40 per share)
	Bank A/c	Dr.		1,52,000
	Calls-in-Arrears A/c	Dr.		8,000
	To Share First and Final Call A/c				1,60,000
	(First and final call received from 3,800 shares and 200 share failed to pay it)

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Better Prospect Ltd.
Balance Sheet
Particulars	Note No.	Amount  ( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	4,92,000
2. Non-Current Liabilities
3. Current Liabilities
Total		4,92,000
II. Assets
1. Non-Current Assets
a. Fixed Assets
i. Tangible Assets	2	1,00,000
2. Current Assets
a. Cash and Cash Equivalents	3	3,92,000
Total		4,92,000

 

NOTES TO ACCOUNTS

Note No.	Particulars		Amount ( `)
1	Share Capital
	Authorised Share Capital
	…… shares of  ` 100 each		-
	Issued Share Capital
	5,000 shares of  ` 100 each		5,00,000
	Subscribed, Called-up and Paid-up Share Capital
	1,000 shares of  ` 100 each (for consideration other than cash)	1,00,000
	4,000 shares of  ` 100 each	4,00,000
	Less: Calls-in-Arrears	(8,000)	4,92,000
2	Tangible Assets
	Land		1,00,000
3	Cash and Cash Equivalents
	Cash at Bank		3,92,000

Page No 8.116:

Question 39:

Light Lamps Ltd. issued 50,000 shares of  ` 10 each as fully paid-up to the promoters for their services to set-up the company . It also issued 2,000 shares of  ` 10 each credited as fully paid-up to the underwriters of shares for their services . journalise these transactions.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Incorporation Expenses A/c	Dr.		5,00,000
	To Share Capital A/c (50,000×10)				5,00,000
	(Shares issued to promoters)
	Underwriting Commission A/c	Dr.		20,000
	To Underwriters’ A/c				20,000
	(Underwriting commission due)
	Underwriters’ A/c	Dr.		20,000
	To Share Capital A/c (2,000×10)				20,000
	(Shares issued to underwriters)

Page No 8.116:

Question 40:

Alpha Ltd. issued 20,000 Equity Shares of   ` 10 each at par payable: On application  ` 2 per share; on allotment  ` 3 per share; on first call  ` 3 per share; on second and final call  ` 2 per share.
Mr. Gupta was allotted 100 shares. Pass necessary  Journal entry relating to the forfeiture of shares in each of the following alternative cases:
 

Case I	If Mr. Gupta failed to pay the allotment money and his shares were immediately forfeited.
Case II	If Mr. Gupta failed to pay allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Case III	If Mr. Gupta failed to pay the first call and on his subsequent failure to pay the second and final call, his shares were forfeited.

Answer:

Application		`	2
Allotment		`	3
First Call		`	3
Final Call		`	2
			10
Books of Alpha Limited Journal
Date	Particulars					L.F.	Debit Amount ( `)	Credit Amount ( `)
Case I	Share Capital A/c (100×5)				Dr.		500
	To Share Forfeiture A/c							200
	To Share Allotment A/c							300
	(100 shares of  ` 10 each,  ` 5 called-up, forfeited for the non-payment of allotment)
Case II	Share Capital A/c (100 × 8)				Dr.		800
	To Share Forfeiture A/c							200
	To Share Allotment A/c							300
	To Share First Call A/c							300
	(100 shares of  ` 10 each,  ` 8 called-up forfeited for non-payment allotment and first-call)
Case III	Share Capital A/c				Dr.		1,000
	To Share Forfeiture A/c							500
	To Share First Call A/c							300
	To Share Final Call A/c							200
	(100 shares of  ` 10 each forfeited for the non-payment  ` 5 each)

 

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