T.Y.B.Com. Financial Accounting Prof. R.N.

Savkare

Buy Back of Shares

1. X Ltd. has furnished the following information :
Paid up Capital: Rs. 5,000. Free Reserves: Rs. 12,000. No. Of Shares: 500 .
Face value per share Rs. 10.
Price settled Rs. 50 per share.

2 . X Ltd desires to buyback, 5,000 equity shares of Rs. 10 each complies with the
conditions. For this purpose, the company decided to issue new preference shares of Rs. 10
each of the equivalent amount.
Pass Journal Entries in the books of X Ltd.

3. Vinit Ltd.
Balance Sheet
As on 31st March, 2009
Liabilities Rs. Assets Rs.
40,000 Equity Shares of Rs. 10 each 4,00,000 Fixed Assets 4,00,000
500 11.5 % Preference Shares of Rs. Stock 1,00,000
100 each 50,000 Debtors 60,000
Revenue Reserve 45,000 Bank 1,20,000
Profit and Loss A/c 70,000
Securities Premium 15,000
Creditors 1,00,000

6,80,000 6,80,000

The company bought back 10,000 equity shares at par after complying with the legal
formalities.
Pass Journal Entries.

4. VIMI Ltd bought back 6,000 equity shares of Rs. 10 each at Rs. 15 per share. No fresh
issue is made for the purpose. Pass Journal Entries.

5. Vedant Ltd. had issued capital of Rs. 50, 00,000 of Rs. 10 each. The balance on general
reserve was Rs. 7, 00,000 and securities premium Rs. 50,000. The company decided to
buyback 1/5 of its share capital at 20% discount. The company had issued Rs. 2, 50,000 11%
preference shares for buyback one month back.
Pass Journal Entries.

6. Vikas Ltd passed a resolution for buying back 25,000 equity shares of Rs. 5 each fully paid
at a premium of 20%. For this purpose, it issued 15%preference shares of Rs. 100 each at par
which was fully subscribed. The company has sufficient balance in Revenue Reserves and
Securities Premium Account.
Pass Journal Entries for the above.

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T.Y.B.Com. Financial Accounting Prof. R.N.Savkare

7. X Ltd furnishes the following information:

80,000 Equity Shares of Rs. 10 each, Rs. 7 per share paid up: Rs 5, 60,000.
General Reserve: RS. 80,000. Profit and Loss A/c: Rs. 6, 00,000.
Securities Premium: Rs. 1, 20,000. Bank Loan (secured): Rs. 3, 00,000.
Unsecured Loan: Rs. 1, 00,000.
Keeping in view the legal requirements, ascertain the maximum number of equity shares that
can be bought back by the company at a price of Rs. 40 per shares.

8. Following information is available from the books of a company :

1,20,000 Equity Shares of RS. 10 each : Rs. 12,00,000. Securities Premium : Rs. 70,000.
General Reserves : Rs. 3,50,000.
The compay decided to buyback 25% of the equity share capital Rs. 12 per share. Pass
Journal Entries without narration.

9. A company buyback 50,000 shares of Rs. 10 each at Rs. 20 per share.

The reserves of the company are as follows :
Securities Premium : RS. 15,00,000.
General Reserve : Rs. 23,00,000.
Pass Journal Entries in the books of a company without narration for buyback of share.

10. Following is the balance sheet of Suyog Ltd. as on 31st, March 2009.

Liabilities Rs. Assets Rs.

Share Capital : Fixed Assets :
Authorised : Land and Building 30,00,000
10,00,000 Equity Shares of Plant and Machinery 30,00,000
Rs. 10 each 1,00,00,000 Furniture 22,00,000
Issued : Investments 15,00,000
8,00,000 Equity Shares of Rs. Current Assets :
10 each Rs. 8 paid up 64,00,000 Debtors 47,00,000
Reserve : Bill Receivable 10,00,000
General Reserve 10,00,000 Bank Balance 40,00,000
Profit and Loss A/c 50,00,000 Stock 20,00,000
Securities Premium 20,00,000
Secured Loans :
11% Debentures 20,00,000
Unsecured Loans : 20,00,000
Current Liabilities
Creditors 15,00,000
Bills Payable 15,00,000

2,14,00,000 2,14,00,000

The company decides to buyback the maximum number of equity shares as may be
permitted at a price of Rs. 20 per share.

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T.Y.B.Com. Financial Accounting Prof. R.N.Savkare

Find out maximum number of shres to be bought back and pass Journal Entries and
prepare Balance Sheet after buyback.

11. Following is the Balance Sheet of Indica Ltd. as on 31st, December 2008.
Balance Sheet
Liabilities Rs. Assets Rs.
Share Capital : Fixed Assets:
Authorised : Land and Building 40,00,000
10,00,000 Equity Shares of Rs. 10 Plant and Machinery 22,00,000
each 1,00,00,000 Furniture 20,00,000
Issued, Subscribed and Called Investments 20,00,000
up : Current Assets, Loans
8,00,000 Equity Shares of Rs. 10 & Advances
each, Rs. 8 per share paid up 64,00,000 Debtors 42,00,000
Reserves and Surplus : Bills Receivables 10,00,000
Profit and Loss A/c 50,00,000 Bank Balance 45,00,000
Securities Premium A/c 30,00,000 Stock 20,00,000
Secured Loans:
10% Debentures 30,00,000
Unsecured loans: 10,00,000
Current Liabilities &
Provisions:
Sundry Creditors 20,00,000
Bills Payable 10,00,000
Provision for Tax 5,00,000

2,19,00,000 2,19,00,000

Keeping in the view the legal requirements ascertain the maximum number of equity
shares that Indica Ltd. can buy back at Rs. 20 per share.
Pass journal entries to record Buy Back and prepare a balance sheet thereafter.

12. The balance sheet of Manish Ltd. as on 31st March, 2009 is as follows:

Liabilities Rs. Assets Rs.

Share Capital Fixed Assets:
Authorised, Issued, Subscribed Net Block 40,00,000
and Called up: Investments 15,00,000
Equity shares of Rs. 10 each 25,00,000 Current Assets, Loans
Reserves & Surplus: & Advances:
Securities Premium 5,00,000 Current Assets
General Reserve 10,00,000 (including Bank
Profit & Loss Account 10,00,000 balance Rs. 15,00,000) 35,00,000
Secured Loans: Loans & Advances 5,00,000
10% Debentures 25,00,000
Current Liabilities &

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T.Y.B.Com. Financial Accounting Prof. R.N.Savkare

Provisions:
Sundry Creditors 15,00,000
Bills Payable 5,00,000

95,00,000 95,00,000

Keeping in the view all the legal requirements ascertain:

a) Maximum number of equity shares that Manish Ltd. can Buy Back.
b) The maximum price it can offer.
Assume that the Buy Back is carried out actually on the legally permissible terms, record
the entries in the journal of Manish Ltd. and prepare its balance sheet therafter.

13. The balance sheet of ABC Ltd. as on 31st March, 2009 was as follows:

Liabilities Rs. Assets Rs.

Equity Shares of Rs. 10 each 4,00,000 Net Block of Fixed
Preference Shares of Rs. 10 each 1,00,000 Assets 7,50,000
Securities Premium 1,27,500 Investments 50,000
General Reserve 1,00,000 Current Assets 10,00,000
Profit & Loss Account 1,22,500
Debentures 8,00,000
Current Liabilities 1,50,000

18,00,000 18,00,000

Keeping in the view the legal requirements, ascertain the maximum number of equity
shares that ABC Ltd. can Buy Back at Rs. 25 per share.
Pass journal entries to record Buy Back and prepare a balance sheet thereafter.

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T.Y.B.Com. Financial Accounting Prof. R.N.Savkare

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T.Y.B.Com. Financial Accounting Prof. R.N.Savkare