Company Accounts – Issue of Shares – Revision

Q 1: Petromax Ltd. having authorised capital of 20,00,000 divided into shares of 10 each, issued 50,000
shares of 710 each at a premium of 72 per share payable as 73 on application 75 including premium
on allotment and the balance in equal instalments over two calls. Applications were received for
92,000 shares and the allotment was done as under:

A: Applicants of 40,000 shares – Allotted 30,000 shares

B: Applicants of 40,000 shares - Allotted 20,000 shares

C: Applicants of 12,000 shares – Nil Suresh who had applied for 2,000 shares (Category A) did not pay
any money other than application money.

Chandar who was allotted 800 shares (Category B) paid both the calls money due along with allotment.
All other allottees paid their dues as per schedule. Pass necessary journal entries

in the books of Petromax Ltd.

Q 2: Srijan Limited issued 10,00,000 new capitals divided into 100 shares at a premium of 20 per
share, payable as under:

On Application 10 per share

On Allotment 40 per share (including premium of 10 per share)

On First and Final Call Balance

Over-payments on application were to be applied towards sums due on allotment and first and final
call, where no allotment was made, money was to be refunded in full.

The issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were
allotted only 2,000 shares and applicants for 3,000 shares were sent letters of regret and application
money was returned to them. All the money due was duly received except the allotment and call
money on 500 shares. Give Journal Entries to record the above transactions (including cash
transactions).

Q 3: X Ltd. issued for public subscription 40,000 equity shares of 10 each at premium of 2 per share
payable as under:

On application Rs. 4 per share

On Allotment Rs. 5 per share (including premium)

On Call Rs. 3 per share

Applications were received for 60,000 shares. Allotment was made pro-rata to the applicants for
48,000 shares, the remaining applications being rejected. Money overpaid on application was applied
towards sums due on allotment.

Shri Chitnis, to whom 1,600 shares were allotted, failed to pay the allotment money and Shrim Jagdale,
to whom 2,000 shares were allotted, failed to pay the call money. These shares were subsequently
forfeited.

Record journal entries in the books of the company to record the above transactions.
Q 4: Y Ltd. issued 40,000 Equity Shares of 10 each at a premium of 2.50 per share.The amount was
payable as follows: On application Rs. 2 per share On allotment Rs. 4.5 per share On call Rs. 6 per
share

Owing to heavy subscription the allotment was made on pro-rata basis as follows:

(a) Applicants for 20,000 shares were allotted 10,000 shares.

(b) Applicants for 56,000 shares were allotted 14,000 shares.

(c) Applicants for 48,000 shares were allotted 16,000 shares. It was decided that excess amount
received on applications would be utilized on allotment and the surplus would be refunded.

Ram, to whom 1,000 shares were allotted, who belong to category (a), failed to pay allotment money.
His shares were forfeited after the call. The company maintains Calls-in-Arrears Account. Pass the
necessary Journal entries in the books of Y Ltd. for the above transactions.

Q 5: Arti Limited was registered with a capital of 20,00,000 divided into shares of 10 each. The
company invited applications for issuing 80,000 shares of 10 each at a premium of 74 per share. The
amount was payable as follows: On Application Rs. 5 per share and On Allotment (Including Premium)
Rs. 9 per share. Applications were received for 1,40,000 shares. Allotment was made on the following
basis:

(i) To applicants for 80,000 shares – 60,000 shares (ii) To applicants for 60,000 shares -
20,000 shares Money overpaid on applications was utilized towards sum due on
allotment. Rajiv, who had applied for 1,200 shares from category (i), failed to pay dues
and his shares were forfeited. The company maintains Calls-in-Arrears Account. Pass
journal entries in the books of Arti Limited to record the above transactions.

Q 6: Journalise the following transactions in the books Bhushan Oil Ltd.:

(a) 200 shares of 100 each issued at a premium of 10 were forfeited for the non-payment of allotment
money of Rs. 60 per share. The first and final call of 20 per share on these shares we’re not made. The
forfeited shares were reissued at 70 per share as fully paid-up.

(b) 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment were
forfeited for non-payment of allotment money of Rs 8 per share including premium. The first and final
call of Rs. 4 per share was not made. The forfeited shares were reissued at 15 per share fully paid- up.

(c) 400 shares of 50 each issued at par were forfeited for non-payment of final call of 10 per share.
300 forfeited shares were reissued at 45 per share fully paid-up.

Q 7: (a) AX Limited forfeited 6,000 shares of 10 each for non-payment of First call of Rs. 2 per share.
The Final call of 3 per share was yet to be made. The Final call was made after Forfeited of these
shares. Of the forfeited shares, 4,000 shares were reissued at Rs. 9 per share as fully paid up. Assuming
that the company maintains Calls in Advance and Calls in Arrears Accounts, prepare Share Forfeited
Account.

(b) BG Limited issued 2,00,000 equity shares of 20 each at a premium of 5 per share. The shares were
allotted in the proportion of 5: 4 of shares applied and allotted to all the applicants. Deepak, who had
applied for 900 shares, failed to pay allotment money of Rs. 7 per share (including premium) and on
his failure to pay First & Final Call of 2 per share, his shares were forfeited. 400 of the forfeited shares
were reissued at 15 per share as fully paid up. Pass necessary Journal entries for the Forfeited and
reissue of Deepak shares in the books of BG Limited. Open Calls in Arrears A/c.
Q 8: Garima Limited issued a prospectus inviting applications for 3,000 shares of Rs. 100 each at a
premium of 20 payable as follows:

On Application Rs. 20 per share On Allotment Rs. 50 (including premium)

On First call Rs. 20 per share On Second call Rs. 30 per share

Applications were received for 4,000 shares and allotments made on pro-rata basis to the applicants
of 3,600 shares, the remaining applications being rejected, money received on application was
adjusted on account of sums due on allotment. Renuka to whom 360 shares were allotted, failed to
pay allotment money and calls money, and her shares were forfeited. Kanika, the applicant of 240
shares failed to pay the two calls, her shares were also forfeited. All these shares were sold to Naman
as fully paid for Rs. 80 per share. Show the journal entries in the books of the company. As a matter
of policy, the company does not maintain calls-in-arrears account.

Q 9: High Light India Ltd. invited applications for 30,000 Shares of 100 each at a premium of 20 per
share payable as follows:

On Application Rs. 40 (including premium) On Allotment Rs. 30 (including 10 premium)

On First Call Rs. 30 On second and final call Rs. 20

Applications were received for 40,000 shares and pro-rata allotment was made on the application for
35,000 shares. Excess application money was utilised towards allotment. Rohan to whom 600 shares
were allotted failed to pay the allotment money and his shares were forfeited immediately after
allotment. Aman who applied for 1,050 shares failed to pay first call and his share were forfeited
immediately after first call. Second and final call was made. All the money due on second call have
been received. Of the shares forfeited, 1,000 share were reissued as fully paid-up for 80 per share,
which included the whole of Aman shares. Record necessary journal entries in the books of High Light
India Ltd. As a matter of policy, the company does not maintain Calls in arrears account.

Q 10: Devam Limited issued a prospectus inviting application for 30,000 equity shares of Rs. 10 each
at a premium of Rs. 4 per share payable as follows:

With Application (including premium Rs. 1) Rs. 3 On Allotment (including Rs. 1) Rs. 4

On First call (including premium Rs. 1) On final call Balance

Applications were received for 45,000 shares. 20% of the applications received were rejected and their
application money was refunded. Remaining applicants were allotted shares on pro-rata basis.

Mr. Sudhir, who has applied for 600 shares, failed to pay the allotment money and his shares were
forfeited immediately after that. Ms. Muskaan, to whom 750 shares were allotted failed to pay the
first call and hence her shares were forfeited. Of the shares forfeited, 1,000 shares were reissued @
Rs. 12 per share, as fully paid up, including all shares of Mr. Sudhir. The company did not make the
final call. As a matter of policy, the company does not maintain Calls-in-Arrears and Calls-in-Advance
Accounts. Pass necessary journal entries.

Q. 11: Khyati Ltd. Issued a prospectus inviting applications for 80,000 equity shares of Rs. 10 each
payable as follows:
Rs. 2 on application; Rs. 3 on allotment; Rs. 2 on first call and Rs. 3 on final call, Applications were
received for 1,20,000 equity shares. It was decided to adjust the excess amount received on account
of over subscription till allotment only. Allotment was made as under:

(i) To applicants for 20,000 shares - in full

(ii) To applicants for 40,000 shares - 10,000 shares
(iii) To applicants for 60,000 shares - 50,000 shares

Allotment was made and all shareholders except Tammana, who had applied for 2,400 shares out of
the group (iii), could not pay allotment money. Her shares were forfeited immediately, after allotment.
Another shareholder Chaya, who was allotted 500 shares out of group (ii), failed to pay first call. 50%
of Tamanna shares were reissued to Satnaam as Rs. 7 paid up for payment of Rs. 9 per share. Pass
necessary journal entries in the books of Khyati Ltd. for the above transactions by opening calls in
arrears account.

Q 12: Denspar Ltd. invited applications of issuing 2,00,000 equity shares of 10 each at a premium of
20 per share. The amount was payable as follows: On Application Rs. 2

On Allotment Rs. 13 per share (including Rs. 10 premium)

On First Call Rs. 7 per share (including Rs. 5 premium)

On Final Call Rs. Per share (including Rs. 5 premium)

Applications for 1,80,000 shares were received. Shares were allotted to all the applicants. Yogesh, a
shareholder holding 5,000 shares paid his entire share money along with the allotment money.
Vishesh, a holder of 7,000 shares, failed to pay the allotment money. Afterwards the first call was
made. Vishesh paid the allotment money along with the first call. Samyesh, a shareholder holding
2,000 shares did not pay first call money. Samyesh’s shares were forfeited immediately after the first
call. The forfeited shares were reissued to Jigesh as 7 paid up for 15 per share. Final call was made
thereafter and was fully received. Pass the necessary journal entries for the above transactions in the
books of Denspar Ltd. by opening calls-in-arrears and calls-in- advance accounts.