Delhi Public School, Hyderabad

Worksheet – Accounting for Share Capital

1. Can a company issue shares at a premium in the absence of any express
authority in its articles?
2. What is the maximum rate of interest which the board of directors of a
company can normally pay on calls-in-advance if the articles are silent on the
matter of such interest?
3. Why securities premium amount cannot be used for payment of cash dividend
among shareholders?
4. Is calls in advance part of company’s share capital?
5. What is ESOP?
6. What is issued capital? How does it differ from Authorized capital?
7. Differentiate between Reserve capital and Capital Reserve on the basis of
time when it can be used.
8. What do you mean by Private placement of shares?
Private Placement of shares implies issue and allotment of shares to a selected
groups of persons privately and not to public in general through public issue.
In order to place the shares privately, a company must pass a special resolution
to this effect.
9. What is Sweat Equity?
Ans. Sweat Equity shares means shares issued by the company to its
employees or whole time directors at a discount or for consideration other
then cash for providing know - how or making available right in the nature of
intellectual properly rights or value addition by whatever name called.
10. At what rate interest on Calls –in-Arrears can be charged by a company.

11. X Ltd took over the assets of Rs. 6,60,000 and liabilities of Rs. 80,000, Y Ltd for
Rs. 600,000. Show the necessary journal entries in the book of X Ltd. assuming
that
Case-I : The consideration was payable 10% in cash and the balance in 54000 equity
shares of Rs. 10 each.
Case-II : The consideration was payable 10% in cash and the balance in 45000
equity shares of Rs. 10 each.
Case-III : The consideration was payable 10% in cash and the balance in 60,000
equity shares of Rs. 10 each.
12. X ltd. was formed with a capital of Rs. 500,000 divided into shares of Rs. 10
each out of these 2000 shares were issued to the vendors as fully paid as
purchase consideration for a building acquired, 1000 shares were issued to
signatories to the memorandum of association as fully paid. The directors
offered 6500 shares to the public and called up Rs. 6 per and received the entry
 called up amount on share allotted. Show these transaction in the Balance sheet
of a company.
13. X Ltd. invited applications for 11,000 shares of Rs. 10 each issued at 20%
premium payable as:
On application Rs. 3 (including Rs. 1 premium)
On allotment Rs. 4 (including Rs. 1 premium)
On 1st Call Rs. 3
On 2nd& final call Rs. 2.
Application were received for 24000 shares.
Category I : One fourth of the shares applied for allotted 2000 shares. Category II:
Three fourth the shares applied for allotted 9000 shares. Remaining applicants
were rejected.
Mr. Mohan holding 300 shares out of category II failed to pay allotment and two
calls and his shares were re-issued @Rs.11per share fully paid-up.
Pass necessary journal entries.
14. A company forfeited 240 shares of Rs. 10 each issued to Raj at a premium of
20%. Raj had applied for 300 shares and had not paid anything after paying Rs
6 per share including premium on application. 180 shares were reissued at Rs.
11 per share fully paid up. Pass journal entries relating to forfeiture and reissue
of shares.
15. Sonu Ltd. company issued 15,000 shares of Rs. 10 each. Payment on there
shares is to be made as follows: On application Rs. 4 ( 1st Feb, 2003) On
allotment Rs. 3 (1st April, 2003) On final call Rs. 3 (1st May, 2003) Rakesh to
whom 1000 shares were allotted paid the full amount on application and
mohan to whom 200 shares were allotted paid the final call money on
allotment. Calculate the amount due on allotment.
16. TPT Ltd. invited applications for issuing 1,00,000 equity shares of Rs. 10 each
at a premium of Rs. 3 per share. The whole amount was payable on application.
The issue was over subscribed by 30,000 shares and allotment was made on
pro-rata basis Pass necessary journal entries in the books of the company.
17. 500 shares of Rs. 100 each were forfeited for the non-payment of allotment
money of Rs. 50 per share. The first and final call of Rs.10 per share on these
shares were not made. The forfeited shares were reissued at Rs. 80 per share
fully paid-up. 30..200 shares of Rs. 100 each forfeited for the non payment
of allotment money of Rs. 50 per share. The first and final call of Rs. 10 per
share on these shares were not made. The forfeited share were reissued at Rs.
14 per share fully paid up.
18. 15 800 Shares of Rs. 10 each issued at per were forfeited for the non-payment
of final call of Rs. 2 per share. These shares were reissued at Rs. 8 per share
fully paid-up.
19. Differentiate between ‘Reserve capital’ & ‘Capital reserve’.
 20. What is meant by : Unlimited liability ; Minimum subscription ; Forfeiture of
shares ; Calls in arrears ; Calls in advance
21. What is the minimum price at which a company can re-issue its shares.
Explain taking an illustration.
22. A company wants to purchase building from its securities premium amount.
Can it do so? Give reasons in support of your answer.
23. Journalise the following:
a. A co. forfeited 100 shares of Rs 10 each Rs 8 called up for non payment of call
of Rs 3. Of these 70 shares were re-issued at Rs 6 Rs 8 called up.
b. A co. forfeited 50 shares of Rs 10 each issued at a premium of Rs 2 for payment
of only application money of Rs 2. Of these 30 shares were re-issued at Rs 11
fully called up.
c. A co. forfeited 100 shares of Rs 10 each issued at a discount of Re 1 for non
payment of first call of Rs 2 & final call of Rs 3. Of these 30 shares were re-issued
at Rs 12 fully called up : 40 shares were re-issued at Rs 7 fully called up.
24. A co. issued 15000 fully paid up equity shares of Rs 100 each for the purchase
of the following assets & liabilities from Gupta Brothers: Plant Rs 3,50,000 ;
Land & building Rs 6,00,000 ; Stock in trade Rs 4,50,000 ; Sundry creditors Rs
1,00,000. Pass the necessary journal entry.
25. X Ltd. issued equity shares of Rs 10 each at a premium of 2.50 per share. The
amount was payable as follows: On application-Rs 2; On allotment -Rs 4.50 ;
On call-Rs 6 Owing to heavy subscription the allotment was made on pro-
rata basis as follows:
a. Applicants for 20000 shares were allotted 10000 shares
b. Applicants for 56000 shares were allotted 14000 shares
c. Applicants for 48000 shares were allotted 16000 shares It was decided
that excess amount received on applications would be utilized on
allotment and the surplus would be refunded. Ram to whom 1000
shares were allotted , who belong to category ‘a’ failed to pay the
allotment money. His shares were forfeited after the call. Pass the
necessary journal entries.
26. C Ltd forfeited 1000 shares of Rs 100 each on these shares the first call of Rs
30 per share was not received and the final call of Rs 20 per share was yet to
be called. These shares were subsequently re-issued at Rs 70 per share Rs 80
paid up.
27. L Ltd forfeited 470 equity shares of Rs 10 each issued at a premium of Rs 5 per share
for non payment of allotment money of Rs 8 per share(including share premium Rs
 5 per share) and the first 7 final call of Rs 5 per share. Out of these 60 equity shares
were subsequently re-issued at Rs 14 per share.
28. Z Ltd. invited applications for issuing 2,00,000 equity shares of Rs. 25 each at
a premium of Rs. 10 per share. The amount was payable as follows : On
application and allotment Rs. 10 per share Balance including premium on
first and final call. Applications for 2,50,000 shares were received.
Application for 25000 shares were rejected and shares were allotted on pro
rata basis to the remaining applicants. All calls were made and were duly
received except the first and final call on 2000 shares allotted to Vijay. Pass
the necessary Journal entries in the books of Z Ltd.
29. Rohit Ltd. Purchased assets worth Re. 41,80,000 from Bhuvnesh Industrial
Corporation and issued equity shares of Re. 100 each, fully paid , in
satisfaction of the purchase consideration. Pass necessary Journal entries in
the books of Rohit Ltd. Assuming that shares were issued:

a.) at par; b.) at a premium of 10%;

c.) at a discount of 5%
30. A company issued 15,000 fully paid up equity shares of Rs.100 each for the
purchase of the following assets and liabilities from Gupta Bros.. Plant
Rs.3,50,000 Stock Rs.4,50,000 Land and Building Rs.6,00,000 Sundry
Creditors Rs.1,00,000 Pass necessary Journal entries.
31. A company purchased a running business from Mahesh for a sum of Rs.
1,50,000 payable as Rs.1,20,000 in fully paid equity shares of Rs.10 each and
balance in cash. The assets and liabilities consisted of the following Plant and
Machinery 40,000 Stock 50,000 Building 40,000 Cash 20,000 Sundry
debtors 30,000 Sundry creditors 20,000. Pass necessary Journal Entries.
32. A limited company has been in corporate with an authorized capital of RS
10,00,000 divided into 1,00,000 shares of Rs 10 each. It offended 90,000 shares
for subscription by the public and out of these 85,000 shares were subscribed
for. The director called for an amount of rs.6 per share and received the entire
amount except a call for Rs.2 per share on 500 share. Calculate the amount of
different categories of share capital.
33. Apex co. ltd. is registered with an authorized capital of Rs.5,00000 divided
into shares of Rs10 each . the company purchased various assets of kailash
for Rs 200000 & payment is made by the issue of 15000 n shares at a premium
of 10% & the balance in cash 20000 shares were issued to the public at par &
full amount received on application. The company issued 400 shares to its
promoters against their services. Record Journal entries for the above
transactions .
34. Sakshi Ltd. Issued a prospectus ,inviting application for 100000 shares of Rs.10 each
at a premium of Rs.5 per share , payable as follows:
 On application Rs.4.50; on allotment Rs.7.50(including premium); on first call
Rs.2 and on final call Re.1.00.
Application were received for 125000 shares and allotment was made pro-rated
to the applicants of 120000 shares, remaining application being refused.
Money received in excess on the application was adjusted towards the
amount due to allotment.
D, to whom 2000 shares were allotted, failed to pay allotment money.
M, the holder of 3000 shares, failed to pay the calls, Pass necessary journal
entries to record the above issue of shares by the company.
35. X Ltd issued a prospectus inviting application for 2000 shares of Rs 10 each
at a premium of Rs 2 per shares payable as follows; on application of Rs 2 ,
on allotment RS 5, on first call , Rs 3 on second call & final call Rs 2.
Application were received for 3000 shares & pro-rate allotment was made on the
application for 2400 shares . Money over paid on application was employed on
account of sum due on allotment.
Ramesh to whom 40 shares were allotted failed to pay anything after application &
Mohan ,the holder of 60 shares failed to pay the two calls , show journal entries .
36. On 1st June 2014 Kartik Ltd. Offered for subscription 50,000 Equity shares of
Rs.100 each at a premium of Rs.20 per share payable as given below:
On Application Rs.20 per share; On Allotment Rs.50 per share( including
premium) and two months after allotment Rs.50 per share.
Applications were received for 84,000 shares. On 1st July 2014 the directors
proceed to allot shares proportionately.
Of these applications for 45000 shares were accompanied with full amount
and hence were accepted in full and the balance allotment was made on pro-
rata basis. Excess amount paid by applicants were utilized towards allotment
and call money due from them.
One of the applicants to whom 300 shares were allotted proportionately failed
to pay the call money.
Prepare a cash book and record necessary Journal entries.
37. Jatin Ltd. Has been registered with an authorized capital of Rs.2,00,000
divided into 2,000 shares of Rs.100 each of which 1,000 shares were offered
for public subscription at a premium of Rs.5 per share payable as under:
On application Rs.10; on allotment Rs.25 (including premium) ; on first call
Rs.40; On final call Rs.30.
Applications were received for 1800 shares of which applications for 300
shares were rejected outright, the rest of the applications were allotted 1,000
shares on pro-rata basis. Excess application money was transferred to
allotment.
All the money were duly received except from Sachin a holder of 200 shares,
who failed to pay allotment and first call money. Record necessary Journal
Entries.