Assignment – Unit 1

5 marks each- Attend any 2 questions

Q 1. "Elucidate redeemable preference shares? Discuss the provisions regarding

redemption of preference shares. Pass necessary journal entry redemption of
preference shares.

Q2. A company was formed with a capital of Rs. 15, 00,000 in shares of Rs. 10
each. It offered to the public 1,00,000 shares payable Re. 1 per share on
applications, Rs. 2 per share on allotment and, Rs. 3 per share on first call, The
balance of Rs. 4 per share to be called only in case of necessity. Applications
were received for 90, 00 shares and the shares were accordingly allotted. All the
money was duly received with the exception of allotment money on 200 shares
and first call on 500 shares. Journalize the transactions and prepare the Balance
Sheet.

Q3. Pilot Company has issued 80,000 10% preference share of Rs. 100 each at par.
Show Journal entries.

Q4. Neel Kamal Ltd. issued 16,000, 10% preference share of Rs. 100 each at 10%
discount. Give necessary journal entries.

Q5. Elaborate the different types of share capital.

Q6. You being a new accountant, hired by an FMCG company, devises a plan for
raising company’s new capital.

Q7. Y Ltd. Decides to redeem 750, 10% Red. Pref. shares of Rs. 100 each at a
premium of 10%. It has a generl reserve of Rs. 70,000 and Securities Premium of
Rs. 4,000.
 a) Find out the amount to be transferred to capital redemption reserve account
in each of the following cases:
b) If it decides to redeem the preference shares out of a fresh issue of 7500
Equity shares of Rs. 10 each at a premium of 5%.
c) If it is decided to redeem pref. shares out of accumulated profits and
reserves.

Q8. ) Kishna Ltd issued 15,000 shares of Rs 100 each at a premium of Rs 10 per
share, payable as follows:

On Application Rs. 30
On Allotment Rs. 50(including premium)
On First & final call Rs. 30

All the shares subscribed and the company received all the money due, With the
exception of the allotment and call money on 150 shares. These shares were
forfeited and reissued to Neha as fully paid share of Rs 12 each. Give journal
entries in the books of the company.

Q9. Write short note on:

Types of shares
Difference between Reserve Capital and Capital Reserve
Difference between Shares and Stocks

Q10. Write in detail journal entries for issue of shares and also for issue of shares at
premium

Q11. Afga & Co. Ltd. Issued 5000preference shares of Rs 10 each at a premium
of Rs 4 per share payable at Rs 3 per share on application, Rs 6 per share on
allotment (including premium), Rs 3 on first call and the balance on final call. The
shares were all subscribed and all money due was received except the first call
money on 1000 shares and the final call money on 1500 shares. Give Cash book
and journal entries to record the above transactions.
Q12. Following items, among others, appeared in the Balance Sheet of X Ltd as
on 1st April,2014:

13.5% Preference Share Capital Rs400000; Fully paid Equity share capital Rs
500000; Partly Paid-60%-Equity Share Capital RS 300000; Securites Premium
Reserve Rs700000; 15% Debentures Rs1000000.
Profit, before interest on debentures and before payment of tax @60%, is Rs
1150000 for the year ended 31st March, 2015.
The Board of Directors of the Company propose a dividend of 15% on equity
capital and capitalization of profits for making partly paid-up shares into fully paid
up.

Q13 Discuss the accounting treatment of redemption of preference shares.

Q14 Give Journal Entries with imaginary figures for issue of share capital
including the forfeiture and re-issue provisions.

Q15. Y Ltd. Decides to redeem 750, 10% Red. Pref. shares of Rs. 100 each at a
premium of 10%. It has a generl reserve of Rs. 70,000 and Securities Premium of
Rs. 4,000.
Find out the amount to be transferred to capital redemption reserve
account in each of the following cases:
a. If it decides to redeem the preference shares out of a fresh issue of
7500 Equity shares of Rs. 10 each at a premium of 5%.
b. If it is decided to redeem pref. shares out of accumulated profits and
reserves.

Q16. Y Ltd. Decides to redeem 750, 10% Red. Pref. shares of Rs. 100 each at a
premium of 10%. It has a generl reserve of Rs. 70,000 and Securities Premium of
Rs. 4,000.
Find out the amount to be transferred to capital redemption reserve
account in each of the following cases:
a. If it is decided to issue 3000 Equity shares of Rs. 10 each at a 10%
discount for the purpose of redemption of pref. shares.
b. If it decided to issue 2950 Equity shares of Rs. 10 each at a 30%
premium for the purpose of redemption of pref. shares.