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22

INTERMEDIATE (IPC) EXAMINATION: MAY, 2016

2.

It is also assumed that necessary resolutions have been passed and requisite legal
requirements related to the issue of bonus shares have been complied with before
issue of bonus shares.

Working Note:
On the basis of the above assumptions, the Authorised Capital should be increased as
under:
Required for bonus issue

` 6,00,000

Less: Balance of authorised equity share capital (available)

(` 2,00,000)

Authorised capital to be increased

` 4,00,000

Total authorised capital after bonus issue (` 20,00,000 + ` 4,00,000) =

` 24,00,000

5.

In the books of Hema Ltd.

Journal Entries
Particulars
i

8% Preference share capital A/c (` 100 each)

Dr.

Debit

Credit

4,00,000
3,20,000

To 8% Preference share capital A/c (` 80 each)

To Capital reduction A/c
ii

Equity share capital A/c (` 10 each)

80,000
Dr.

10,00,000
2,00,000

To Equity share capital A/c (` 2 each)

To Capital reduction A/c
iii

Capital reduction A/c

8,00,000
Dr.

32,000
32,000

To Equity share capital A/c (` 2 each)

iv

(a) 6% Debentures A/c

Dr.

3,00,000

To Debenture holders A/c

(b) Debenture holders A/c

3,00,000
Dr.

3,00,000

To Freehold property A/c

v

Accrued debenture interest A/c

vi

To Bank A/c
Freehold property A/c

3,00,000
Dr.

24,000
24,000

Dr.

1,50,000

To Capital reduction A/c

vii Bank A/c

1,50,000
Dr.

2,50,000

To Trade investment A/c

2,00,000

To Capital reduction A/c

50,000

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