TAGORE PUBLIC SCHOOL, PALWAL

M.M 25 Test-Issue of Shares Max Time 1 Hr

1. Assertion (A): Securities Premium can be used for issue of Partly paid Bonus Shares.
Reason (R): The companies Act 2013, prescribes that Securities Premium Account cab be used for
issue of full paid up or partly paid up Bonus Shares.
In the above context of above two statements which of the following is correct?
a) Assertion (A) and Reason (R) are correct but Reason (R) is not correct explanation of Assertion
(A)
b) Assertion (A) and Reason (R) are correct but Reason (R) is correct explanation of Assertion
(A)
c) Only Assertion (A) is correct
d) Both Assertion (A) and Reason (R) are not correct. 1
2. Assertion (A): Shares cannot be allotted unless minimum subscription is received.
Reason (R): SEBI has prescribed that a company issuing shares to public cannot allot shares unless it
receives subscription of 90% of the shares issued
In the above context of above two statements which of the following is correct?
a) Assertion (A) and Reason (R) are correct but Reason (R) is not correct explanation of Assertion
(A)
b) Assertion (A) and Reason (R) are correct but Reason (R) is correct explanation of Assertion
(A)
c) Only Assertion (A) is correct
d) Both Assertion (A) and Reason (R) are not correct. 1
3. Assertion (A): Reserve Capital and Capital Reserve are synonymous i.e. they mean the same.
Reason (R): Reserve Capital is the capital which the company resolves to call on its winding up. Capital
Reserve is a reserve to which capital profit are transferred.
In the above context of above two statements which of the following is correct?
a) Assertion (A) and Reason (R) are correct but Reason (R) is not correct explanation of Assertion
(A)
b) Assertion (A) and Reason (R) are correct but Reason (R) is correct explanation of Assertion
(A)
c) Only Assertion (A) is correct
d) Both Assertion (A) and Reason (R) are not correct. 1
4. Assertion (A): Forfeited shares may be reissued by the company at a discount but the amount of
discount cannot be more than the amount forfeited on the reissue shares
Reason (R): It being sale of shares and not an issue of shares. Thus the company can reissue them at
any price
In the above context of above two statements which of the following is correct?
a) Assertion (A) and Reason (R) are correct but Reason (R) is not correct explanation of Assertion
(A)
b) Assertion (A) and Reason (R) are correct but Reason (R) is correct explanation of Assertion
(A)
c) Only Assertion (A) is correct and Reason (R) is not correct
 d) Both Assertion (A) and Reason (R) are not correct. 1
5. If a share of Rs. 10 issued at a premium of Rs. 2 on which the full amount has been called and Rs. 8
(including premium) paid is forfeited, the share capital account will be debited with:
(a) Rs. 12 (b) Rs. 10 (c) Rs. 8 (d) Rs. 6 1
6. Net Assets minus Capital Reserve is:
(a) Purchase Consideration (b) Goodwill
(c) Total Assets (d) Liquid Assets 1
7. Pass necessary Journal entries for the following transactions in the books of Gopal Ltd. 4
(a) Purchased furniture for Rs. 2,50,000 from M/s Furniture Mart. The payment to M/s Furniture Mart
was made by issuing equity shares of Rs. 10 each at a premium of 25%.
(b) Alok Ltd forfeited 300 Equity Shares of Rs. 10 each, fully called up held by Ram for non payment
of allotment money of Rs. 3 per share and first and final call of Rs. 4 per share. Out of these 250 shares
were reissued to Shyam for a total payment of Rs. 2,000. Pass necessary Journal entry.
8. On 1st April 2021 Asian Paint Ltd was formed with an authorized capital of Rs. 10,00,000 divided into
1,00,000 equity shares of Rs. 10 each. The company issued prospectus inviting application for 90,000
equity shares. The company received application for 85,000 equity shares. All call were made and
received except Ram holding 1000 shares and Shyam holding 2,000 shares did not pay final call of Rs.
2 per share. Shyam’s shares were forfeited and later 1500 shares reissued at Rs. 8 per share fully called
up.
Show Share Capital in the Balance Sheet of company as per Schedule III Part-I of Companies Act
2013. 3
9. A limited company forfeited 200 shares of Rs. 100 each (originally issued at 20% premium which was
payable along with application money) on which allotment money of Rs. 40 and first call of Rs. 30
were not received. The final call of Rs. 20 is not yet been called. These shares were originally allotted
on pro rata basis of 5 : 4. These sharers were subsequently reissued at a discount of Rs. 10 per share
credited as Rs. 80 paid up.
Pass necessary Journal entries of forfeiture and reissue of shares 4
10. Sargam Ltd. invited applications for issuing 80,000 equity shares of 100 each at a premium. The
amount was payable as follows:
On Application 20 per share;
On allotment 60 (including premium) per share;
On First and Final Call 40 per share.
Applications for 1,20,000 shares were received. Allotment was made on pro rata basis to all the
applicants. Excess money received on applications was adjusted on sums due on allotment. Sitaram,
who had applied for 6,000 shares, failed to pay the allotment money and Harnam did not pay first and
final call on 800 shares allotted to him. The shares of Sitaram and Harnam were forfeited. 4,200 of
these shares were reissued for 100 per share as fully paid-up. The reissued shares included all the
forfeited shares of Harnam.
Pass necessary Journal entries for the above transactions in the books of Sargam Ltd. 8