Issue of Shares  

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SATISH ACCOUNTS CLASSES
C4E-JANAK PURI, NEW DELHI-58
9811368059,9560588059

HOTS QUESTIONS ON COMPANY ACCOUNTS

Q1. High Light India Ltd. Invited applicants for 30,000 shares of ₹100 each at a premium of
₹20 per share payable as follows:

On Application ₹40 (including ₹10 premium)

On Allotment ₹30 (including ₹10 premium)
On First Call ₹30
On Second and Final Call ₹20
Applications were received for 40,000 shares and pro-rata allotment was made on the
application for 35,000 share. Excess application money was utilized towards allotment.

Rohan to whom 600 shares were allotted failed to pay the allotment money and his share
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 shares were reissued as fully paid-up for ₹80 per share, which
included the whole of Aman’s shares.
Record necessary journal entries in the books of High Light India Ltd.

Q2. Mohan Ltd issued for public subscription 40,000 equity shares of ₹10 each at premium of
₹2 per share payable as under:

On application ₹4 per share

On Allotment ₹5 per share(including premium)
On Call ₹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 overpad 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
Shri Jagdale, to whom 2,000 shares were allotted, failed to pay the allotment call money.
These shares were subsequently forfeited.
Record journal entries in the books of the company to record the above transactions.

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Q3. The director of Poly plastic Limited resolved that 200 equity shares of ₹100 each be
forfeited for non-payment of the second and final call of ₹30 per share. Out of these, 150
shares were re-issued at ₹60 per share of Mohit.
Show the necessary journal entries.

Q4. On January 1, 2015, the Director of X Ltd, issued for public subscription 50,000 equity
shares of ₹10 each at ₹12 per share payable as to ₹5 on application (including premium) ,
₹4 on allotment and the balance on call on May 01, 2015.
The list were closed on February 10, 2015 by which date applications for 70,000 shares
were received. Of the cash received ₹40,000 was returned and ₹60,000 was applied to the
amount due on allotment, the balance of which was paid on February 16, 2015.
All the shareholders paid the call due on May 01, 2015 with the exception of an allottee of
500 shares.
These shares were forfeited on September 29, 2015 and reissued us fully paid at ₹8 per
share on November 01,2015.
The company, as a matter of policy, does not maintain a calls-in-arrears account.
Give journal entries to record these share capital transactions in the books of X.Ltd.

Q5. 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 for ₹60 per share. The first and final call of ₹20 per share on these
shares were not made. The forfeited shares were reissued at ₹70 per share as fully paid –
up.
(b) 150 shares of ₹100 each issued at a premium of ₹4 per share payable with allotment were
forfeited for non – payment of allotment money of ₹8 per share including premium. The
first and final calls of ₹4 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. These shares were issued at ₹45 per share fully paid – up .

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Q6. O Limited issued a prospectus offering 2,00,000 equity shares of ₹10 each, at a premium
of ₹2 per share, payable as follows:

On Application ₹2.50 per share

On Allotment ₹4.50 per share
(including premium)
On first Call(three months from allotment) ₹2.50 per share
On Second Call(three months after first 2.50per share
call)

Subscriptions were received for 3,17,000 shares on April 23, 2017 and the allotment made
on April 30, was as under:

Shares Allotted
(i) Allotment in full( two applicants paid in full on 38,000
allotment in respect of 4,000 shares each)
(ii) Allotment of two shares for every three shares 1,60,000
applied for
(iii) Allotment of one share for every four shares 2,000
applied for

Cash amounting to ₹77,500 ( being application money received with applications on

31,000 shares upon which no allotments were made) was returned to applicants on May
6, 2017.
The amounts called from the allottees were received on the due dates with the exception of
the final call on 100 shares. These shares were forfeited on November 15,2017 and reissued
to Aman on November 16 for payment of ₹9 per share.
Record journal entries other than those relating to cash, in the books od O limited, and also
show how to transactions would appear in the balance sheet assuming that the company
paid interest due from it on October 31,2017.

Q7. Garima Limited issued a prospectus inviting applications for 3,000 shares of ₹ 100 each at
a premium of ₹ 20 payable as follows:
On Application ₹ 20 Per Share
On Allotment ₹ 50 Per Share (Including Premium)
On First Call ₹ 20 Per Share
On Second Call ₹ 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.

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Kanika, the applicant of 200 Shares failed to pay the two calls, her shares were also
forfeited. All these shares were sold to Naman as fully paid for ₹ 80 per share. Show the
journal entries in the books of the company.

Q8. Sunrise Company Limited offered for public subscription 10,000 shares of ₹ 10 each at ₹
11 per share. Money was payable as follows:
₹ 3 on application
₹ 4 on allotment (including premium)
₹ 4 on first and final call.
Applications were received for 12,000 shares and the directors made up pro-rata allotment.
Mr. Ahmad, an applicant for 120 shares, could not pay the allotment and call money,
and Mr. Basu, a holder of 200 shares, failed to pay the call. Ali these shares were forfeited.
Out of the forfeited shares 150 Shares (the whole of Mr. Ahmad’s shares being
included) were issued at ₹ 8 per share. Record journal entries for the above transactions
and prepare the shares forfeiture account.

Q9. Devam Limited issued a prospectus inviting application for 30,000 equity shares of ₹ 10
each at a premium of ₹ 4 per share payable as follows:
With application (including premium ₹ 1) ₹3
On Allotment (Including premium ₹ 1) ₹4
On first call (including premium ₹ 1) ₹4
On Second and 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. Muskan, to whom 750 shares were allotted failed to pay the first call and hence
her shares were forfeited.
The forfeited shares of Mr. Sudhir were re – issued to Lakshya for ₹ 8 per share as
fully paid up.
Final call was made due on remaining applicants and was received except on 1,000
shares of Amit. These shares were forfeited.
Of the shares forfeited, 1500 shares were re-issued to Devika for Rs. 12 per share as fully
paid up, the whole of Muskan shares being included. Record journal entries in the books
of the company.

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SATISH BHATT: 9560588059