According to Section 2(20) of the Companies Act, 2013, a company means, "A company incorporated under this Act or any previous Company Law".

In the word of Prof. L. H. Haney, "A company is an artificial person created by law, having separate entity with a perpetual succession and a common seal."

In the word of Lord Justice Lindley, "It is an association of persons who contribute money or money's worth to a common stock and employ it for some common purpose."

(i)  Incorporation: A company is an artificial person that comes into existence through process of law, i.e. it is governed by The Companies Act.

(ii) Separate Legal Entity: A Company is a legal person and its entity is quite distinct and separate from its members. A company can own property, incur debts, borrow money, enter into contracts, sue and be sued. It can conduct a lawful business and enter into contract with others.

(iii) Limited Liability: The liability of the members is usually limited to the value of the shares subscribed by each of them.

Example for Clarification: If a shareholder is holding 500 shares of ` 10 each, on which he has already paid ` 7 per share, then in the event of losses or company's failure to pay debts, the shareholder is liable to pay only ` 1,500 (i.e. the unpaid amount of ` 3 on 500 shares).

(iv) Perpetual Existence: Company has a permanent or perpetual existence, i.e. its existence is not affected by death, insolvency, coming or going of the members.

(v) Transfer of Shares: The shareholders enjoy a right to transfer their shares without restriction in case of public companies. However, in case of private companies, Articles of Association restrict the transfer of shares.

(vi) Separation of Management from Ownership: Shareholders are the owners, but the company is managed by their elected representatives called Directors.

(vii) Common Seal: The common seal acts as the official signature of the company. All important documents of the company must bear the common seal of the company.

1. One Person Company

2. Private Company

3. Public Company

One Person Company (OPC)

Defination 

According to Section 2(62) of the Companies Act, 2013, One Person Company means a company which has only one person as a member.

It is a company incorporated as a private company which has only one member. As per the draft rules:

(a) Only a natural person, who is an Indian Citizen and resident in India can incorporate an OPC or be a nominee for the sole member of an OPC.

(b) A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.

(c) An OPC cannot carry out Non – Banking Financial Investment activities including investment in securities of any body corporate.

Private Company

A Private Company is one which by its Articles of Association:

(i) Restricts the right of its members to transfer shares.

(ii) Has a minimum of 2 and a maximum of 200 members excluding past or present employees of the company, who are the members of the company.

(iii) Prohibits any invitation to the general public to subscribe for its shares.

(iv) Must have a minimum paid up capital of ` 1 lakh or such higher amount which may be prescribed from time – to – time.

It is necessary for a private company to use the word 'Private Limited' after its name as per Section 2(68) of the Companies Act, 2013.

Public Company

A public company means a company, which is not a private company. A public company is one which:

(i) Has a minimum paid – up capital of ` 5 lakhs or a higher amount which may be prescribed from time – to – time.

(ii) Has a minimum of 7 members and no limit on maximum members.

(iii) Has no restriction on transfer of shares.

(iv) Is not prohibited from inviting subscription from general public. The name of a Public Company ends with the word 'Limited'.

Practical Question

1. The authorized capital of XYZ Ltd. is ` 70,00,000 divided into 7,00,000 equity shares of ` 10 each. Out of these, the company issued 5,00,000 equity shares for subscription to the public. The public applied for 4,70,000 equity shares and all the money was duly received. How will you show the 'Share Capital A/c' in the Balance Sheet of XYZ Ltd. Also prepare 'Notes to Accounts' for the same.

(Share Capital (Subscribed and fully paid up) = ` 47,00,000)

2. ACE Ltd. is registered with capital of 20,00,000 divided into 2,00,000 equity shares of ` 10 each. The company issued 1,50,000 equity shares for subscription to the public. The public applied for 1,40,000 equity shares and all the money was duly received, except the final call of ` 3 per share on 4,000 shares. Show how Share Capital will appear in the Balance Sheet of the company. Also prepare 'Notes to Accounts' for the same.

(Share Capital Subscribed but not fully paid up) = ` 13,88,000)

3. On 1st April, 2011, Janta Ltd. was formed with an authorized capital of ` 30,00,000 divided into 30,000 shares of ` 100 each. The company invited applications for issuing 10,000 equity shares. The amount was payable as follows:

On Application : ` 30

On Allotment : ` 50

On Final Call : ` 20

The issue was fully subscribed and the company allotted shares to all the applicants. All money was received except the final call on 1,000 shares. Show the 'Share Capital' in the Balance Sheet of the company as per Schedule III Part I of the Companies Act, 2013 as at 31st March, 2015 and also show Notes to Accounts.

(Share Capital Subscribed but not fully paid up) = ` 9,80,000)

4. Sunflower Ltd. has an authorised capital of ` 20,00,000 divided into 1,00,000 Equity Shares of ` 20 each. The company invited applications for 30,000 shares. Applications for 28,000 shares were received. All calls were made and were duly received except the final call of ` 3 per share on 2,000 shares. Show how Share Capital will appear in the Balance Sheet of the company. Also prepare notes to accounts.

(Share Capital Subscribed but not fully paid up) = ` 5,54,000)

5. On 1st April, 2012, Janta Ltd. was formed with an authorised capital of ` 50,00,000 divided into 1,00,000 equity shares of ` 50 each. The company issued prospectus inviting applications for 90,000 shares. The issued price was payable as under:

On Application : ` 15

On Allotment : ` 20

On Call Balance amount

The issue was fully subscribed and the company allotted shares to all the applicants. The company did not make the call during the year.

Show the following:

(a) Share capital in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013.

(b) Also prepare 'Notes to Account' for the same. (CBSE, Delhi 2014 (II))

(Share Capital Subscribed but not fully paid up) = `31,50,000)

6. Newbie Ltd. was registered with an authorized capital of ` 5,00,000 divided into 50,000 equity shares of ` 10 each. Since the economy was in robust shape, the company decided to offer to the public for subscription 30,000 equity shares of ` 10 each at a premium of ` 20 per share. Applications for 28,000 shares were received and allotment was made to all the applicants. All calls were made and duly received except the final call of ` 2 per share on 200 shares. Show the 'Share Capital' in the Balance Sheet of Newbie Ltd. as per Schedule III Part I of the Companies Act, 2013. Also prepare Notes to Accounts for the same. (CBSE, Sample Paper 2015, Modified)

(Share Capital = ` 2,79,600)

Issue of Shares at Par

7. Ravi Ltd. issued prospectus inviting applications for 10,000 shares of ` 10 each, payable as: ` 3 on application; ` 5 on allotment and ` 2 on first and final call. All shares were applied for. Pass the necessary Journal Entries.

8. Krishna Limited issued a prospectus inviting applications for 20,000 shares of ` 10 each, payable as: ` 3 on Application; ` 3 on Allotment and ` 4 on First and Final Call.

Applications were received for 20,000 shares. Allotment was made to all applicants. All dues were duly received. Give the necessary Journal Entries and opening Balance Sheet in the Company's books.

9. Sony Ltd. invited applications for 50,000 shares of the value of ` 20 each. The amount is payable as: ` 5 on Application, ` 8 on allotment and balance on first and final call. The entire issue was applied and amounts were duly received. Give the Journal Entries for the above transactions.

10. India Ltd. issued a prospectus offering 10,000 equity shares of ` 10 each, payable as ` 3 on application, ` 2 on allotment, ` 4 on first call and ` 1 on second and final call. The issue was fully subscribed and allotment was made accordingly. All the payments were duly received. Journalise the above transactions in the books of the company.

11. Sundar Ltd. issued a prospectus inviting applications for 40,000 shares of ` 100 each, payable as: ` 20 on application, ` 30 on allotment, ` 20 on first call and ` 30 on second and final call. All the shares were applied and allotted. Give Journal Entries.

Issue of Shares at Premium

12. X Ltd. was registered with an authorised capital of ` 10,00,000 divided into equity shares of ` 10 each. It issued 40,000 shares to the public at a premium of ` 2 each, payable as ` 2 on application, ` 5 on allotment (including premium). ` 3 on first call and ` 2 on second and final call. All the shares were subscribed and all money is duly received. Pass Journal Entries.

13. Satya Ltd. was registered with an authorised capital of ` 70,00,000 divided in 7,00,000 equity shares of ` 10 each. Company issued 1,00,000 equity shares at a premium of ` 3 per share, payable as follows: ` 4 on Application; ` 5 on Allotment (including premium); ` 2 on First Call and ` 2 on Second and Final Call. All shares were subscribed and all the money was duly received. Prepare necessary Journal Entries.

14. New Era Ltd. issued 40,000 shares of ` 10 each at a premium of ` 2 payable as: ` 5 on application, ` 4 on allotment and ` 3 on first and final call. Issue was fully subscribed and all money was duly received as. Give the necessary Journal Entries in the books of the company.

(Hint: In the given question, it is not mentioned as to when the securities premium is receivable. As stated earlier, in such a case, it is assumed that the amount of securities premium becomes due along with the allotment money)

15. The Pacific Ltd. issued 50,000 equity shares of ` 10 each at a premium of ` 2 per share. The amount was payable as: ` 2 on application, ` 5 on allotment (including premium) and the balance on final call. The company received all the amounts till the allotment and it has not yet made the first and final call. Pass necessary Journal Entries. (Hint: The Journal Entries for first and final call will not be passed)

16. JP Ltd. issued 20,000 shares of ` 10 each at a premium of ` 3 per share payable as:

On Application ` 4 (including ` 1 premium)

On Allotment ` 5 (including ` 2 premium)

On First and Final Call : ` 4

The applications for 20,000 shares were received. All money was received as and when due. Give the necessary Journal Entries in the books of the company.

17. AB Ltd. Invited applications for 20,000 equity shares of ` 10 each at a premium of ` 4 per share. The whole amount was payable on application. Issue was fully subscribed. Pass necessary Journal Entries.

Under Subscription

18. Kent Ltd issued a prospectus inviting applications for 30,000 shares of ` 10 each at a premium of ` 2 per share payable as ` 2 on Application, ` 5 (including premium) on Allotment ` 3 on First Call and balance on second and final call.

Applications were received for 28,000 shares. All money was duly received. Pass the necessary Journal Entries.

19. The authorized capital of Suhas Ltd. is ` 50,00,000 divided into 25,000 shares of ` 200 each. Out of these, the company issued 12,000 shares of ` 200 each at a premium of 10%. The amount was payable as follows:

On Application : ` 60

On Allotment : ` 60 (including premium)

On First : ` 30

On Final Call : Balance

Public applied for 11,000 shares. All the money was duly received. Prepare an extract of Balance Sheet of Suhani Ltd. as per Schedule III, Part I of the Companies Act, 2013, disclosing the above information. Also prepare 'Notes to Accounts' for the same. (CBSE, All India 2013, Modified)

(Balance Sheet Total = ` 24,20,000)

20. The authorised capital of Sarang Ltd. is ` 1,20,00,000 divided into 12,00,000 shares of ` 10 each. Out of these, company issued 8,00,000 shares of ` 10 each at a premium of 20%. The amount per share was payable as follows.

On Application : ` 2

On Allotment : ` 6 (including premium)

On First : ` 2

On Final Call : Balance

Public applied for 7,80,000 shares. All the money was duly received. Prepare an extract of Balance Sheet of Sarang Ltd. as per Schedule III, Part I of the Companies Act, 2013, disclosing the above information. Also prepare 'Notes to Accounts' for the same. (CBSE, Foreign 2013, Modified)

(Balance Sheet Total = ` 93,60,000)

21. Sagar Ltd. had authorised capital of ` 4,00,000 and issued 20,000 shares of ` 10 each at a premium of 10%. Payments were made as: On application ` 3 on allotment ` 6 and on first and final call ` 2. Applications were received for 19,000 shares and all were accepted. All money was duly received. Pass necessary Journal Entries in the books of company.

Oversubscription and Rejection

22. Goodwill Ltd. Offered for public subscription 60,000 equity shares of ` 10 each payable as follows:

On Application ` 5

On Allotment : ` 3

On First and Final Call : ` 2

Applications were received for 75,000 shares. The directors rejected applications for 15,000 shares and allotted in full to the applicants for remaining shares. Pass Journal Entries to record the above transactions.

(Hint: Excess amount refunded on application = ` 75,000)

23. Sunshine Ltd. issued 20,000 shares of ` 10 each at a premium of ` 2 payable as ` 5 (including premium) on application, ` 4 on allotment and ` 3 on first and final call. Applications for 24,000 shares were received. Out of these 4,000 applications were rejected and full allotment was made to the remaining applicants. Give Journal Entries in the books of the company.

(Hint: Excess amount refunded on application = ` 20,000)

Oversubscription, Pro rata and Rejection

24. HP Ltd. with an authorised capital of ` 5,00,000 invited applications for 20,000 shares of ` 10 each payable as: ` 3 on application. ` 4 on allotment (including premium) and ` 4 on first and final call. There was oversubscription and applications were received for 36,000 shares. Allotment was made as follows:

Applicants of 15,000 shares 15,000 shares

Applicants of 18,500 shares 5,000 shares

Applicants of 2,500 shares : Nil

Excess money on application was adjusted against the sums due on allotment and call. All money due was duly received. Give Journal Entries to record the above transactions.

(Hint: Excess application money adjusted to: Share Allotment = ` 20,000; Shares First and Final Call = ` 20,000; Bank (refund) = ` 8,000)

25. Kumar Limited invited applications for 20,000 shares of ` 10 each payable as follows: ` 3 on application; ` 2 on allotment; ` 3 on first call and ` 2 on second and final call. Applications received for 30,000 shares and the allotments were made as follows:

Applicants of 8,000 shares : 8,000 shares

Applicants of 16,000 shares : 12,000 shares

Applicants of 6,000 shares : Nil

All money was duly received. Pass necessary Journal Entries. Prepare Cash Book and also show the Balance Sheet.

(Hint: Excess Application money adjusted to Share Allotment = ` 12,000; Total of Cash Book: = ` 2,18,000; Balance Sheet Total = ` 2,00,000)

26. X Ltd. invited applications for the issue of 10,00,000 equity shares of ` 10 each payable as follows: on application and allotment ` 3 per share, on first call ` 4 per share, on second and final call ` 3 per share. Applications for 15,00,000 shares were received and pro rata allotment was made to all the applicants. Excess application money was adjusted on the sums due on first call. When the first call was made one shareholder who had applied for 15,000 shares did not pay the call money. Pass necessary Journal Entries in the books of the company. (CBSE, All India Comptt. 2004)

(Hint: Excess Application money adjusted to Share First Call = ` 15,00,000; Amount Received on First Call = ` 24,75.000)

Cash Book

27. Marshal Ltd issued a prospectus inviting applications for 20,000 shares of ` 10 each at a premium of ` 2 per share payable as follows: ` 2 on application, ` 5 on Allotment (including premium), ` 3 on First Call and Balance on Second and Final Call. Applications were received for 19,000 shares. All money was duly received. Pass the Journal Entries and prepare cash book.

(Hint: Total of Cash Book: = ` 2,28,000)

28. Pawan Ltd. invited applications for 30,000 shares of ` 10 each. Payments were to be made as follows: ` 3 on Application; ` 3 on Allotment; ` 2 on First call and ` 2 on Final call. All the shares were applied. Pass entries in the Cash Book, Journal, Ledger and show the Balance Sheet of the company.

(Hint: Total of Cash Book: = ` 3,00,000)

Calls – in – Arrears and Calls – in – Advance

29. Bharat Ltd. made the first call of ` 2 per share on its 1,00,000 Equity Shares on 1st March, 2006. Ashok, a shareholder, holding 800 shares paid the second and final call amount along with the first call money. The second and final call amount was ` 3 per share. Pass necessary Journal Entries for recording the above using the Calls – in – Advance Account. 

30. Shine Limited invited applications for 50,000 shares of ` 10 each payable as: ` 2.50 on application, ` 3 on allotment and balance on first and final call. All the shares were applied and allotted. Ramesh, holding 700 shares paid the whole of the amount alongwith allotment. Pass the necessary Journal Entries.

31. Moon Ltd. was registered with a capital of ` 7,00,000 in shares of ` 10 each and issued 50,000 such shares at a premium of ` 2 per share, payable as ` 3 per share on application, ` 4 per share on allotment (including premium) and ` 3 per share on first call and balance on second and final call.

All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 500 shares and another shareholder holding 400 shares failed to pay the first call money. Give Journal Entries to record the above transactions

Consideration other than cash

32. Goodluck Ltd. purchased machinery costing ` 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity shares of ` 10 each at a premium of 25%. Pass the necessary Journal Entries for the above transactions in the books of Goodluck Ltd. (CBSE, All India 2011 (I))

((i) Dr. Machinery A/c and Cr. Fair Deals Ltd. by 1 10,00,000;

(ii) Dr. Fair Deals Ltd. by 1 10,00,000, Cr. Share Capital A/c by 18,00,000 and Securities Premium

Reserve A/c by 12,00,000; Number of Shares to be issued = 1 10,00,000 ÷ 12.5 = 80,000 Shares)

33. Raja Ltd. purchased building from Ashoka Ltd. for ` 36,00,000.The vendors were paid by issue of equity shares of ` 10 each. Pass the necessary entries in the books of Raja Ltd. when (i) shares were issued at par; and (ii) shares were issued at 20% premium. (CBSE, Foreign 2007)

(Hint: Number of Shares to be issued: (I) 3,60,000 shares; (ii) 3,00,000 shares)

34. Nuclear Ltd. took over the assets of 1 5,50,000 of Maharaja Ltd. payable by the issue of fully paid Equity Shares of ` 100 each at a premium of 10%. Pass necessary Journal Entries in the books of Maharaja Ltd.

((i) Dr. Assets A/c and Cr. Maharaja Ltd. by 15,50,000;

(ii) Dr. Maharaja Ltd. by 15,50,000, Cr. Equity Share Capital A/c by 15,00,000 and Cr. Securities

Premium Reserve A/c by 150,000; Number of Shares to be issued = 15,50,000 ÷ 110 = 5,000 Shares)

35. Z Ltd. purchased furniture for 199,000 from Y Ltd. The payment to Y Ltd. was made by issue of Equity Shares of 110 each. Pass the necessary Journal Entries in the books of Z Ltd. for the above transactions when shares were issued at 10% premium. (CBSE, Delhi Comptt. 2010)

(For Purchase of Furniture: Dr. Furniture A/c and Cr. Y Ltd. by 199,000; Issue of Shares at Premium:

Dr. Y Ltd. by 199,000, Cr. Share Capital A/c by 190,000 and Securities Premium Reserve A/c by

19,000; Number of Shares to be issued =199,000+ 11 = 9,000 Shares)

36. A Ltd. purchased the business of B Ltd. for 190,000. Payment was made by issue of Equity Shares of 110 each. What Journal Entries will be made when shares are issued at 20% premium?

(CBSE, Foreign 2011)

(For Business Purchase: Dr. Business Purchase A/c and Cr. B Ltd. by 190,000; Issue of Shares at Premium:

Dr. B Ltd. by 190,000, Cr. Share Capital A/c by 175,000 and Securities Premium Reserve A/c by

115,000; Number of Shares to be issued = 190,000 +12= 7,500 Shares)

37. K Ltd. purchased the building for ` 6,60,000 from Z Ltd. Half the payment was made in cash and for the remaining half K Ltd. issued Equity Shares of ` 100 each at a premium of 10% in favour of Z Ltd. Pass the necessary Journal entry only for the issue of Equity Shares. (CBSE, Delhi Comptt. 2006) (Dr. Z Ltd. by 13,30,000, Cr. Equity Share Capital A/c by 13,00,000 and Securities Premium Reserve A/c by 130,000; Number of Shares to be issued = 13,30,000 +110 = 3,000 Shares)

38. M Ltd. purchased from N Ltd. land costing ` 12,00,000.14,00,000 were paid to N Ltd. through a bank draft and for the balance amount equity shares of 1100 each were issued at a premium of 25%. Pass necessary Journal Entries for the above transactions in the books of M Ltd. Show your working notes clearly. (CBSE, All India Comptt. 2013)

((I) Dr. Land A/c and Cr. N Ltd. by 112,00,000;

(ii) Dr. N Ltd. and Cr. Bank A/c by 14,00,000;

(iii) Dr. N Ltd. by 18,00,000, Cr. Equity Share Capital A/c by 16,40,000 and

Cr. Securities Premium Reserve A/c by 11,60,000; Number of Shares to be issued

= 18,00,000 + 125 = 6,400 Shares)

39. X Ltd. purchased furniture of 110,00,000 from Y Ltd. and paid 20% of the amount by accepting a bill of exchange in favour of Y Ltd. The remaining amount was paid by issuing equity shares of ` 100 each at a premium of 25% to Y Ltd. Showing your working notes clearly, pass necessary Journal Entries for the above transactions in the books of X Ltd. (CBSE, Delhi Comptt. 2013)

((i) Dr. Furniture A/c and Cr. Y Ltd. by 110,00,000;

(ii) Dr. Y Ltd. by 12,00,000 and Cr. Bills Payable A/c by 12,00,000;

(iii) Dr. Y Ltd. by 18,00,000, Cr. Equity Share Capital A/c by 16,40,000 and Cr. Securities Premium

Reserve A/c by 11,60,000; Number of Shares to be issued = 18,00,000 + 125 = 6,400 Shares)

40. Nikhil Ltd. purchased a running business from Sonia Ltd. for a sum of ` 22,00,000 by issuing 20,000 fully paid equity shares of ` 100 each at a premium of 10%.The assets and liabilities consisted of the following: Machinery ` 7,00,000, Debtors ` 2,50,000, Stock ` 5,00,000 Building ` 11,50,000 and Bills Payable ` 2,50,000. Pass necessary Journal Entries in the books of Nikhil Ltd. for the above transactions.

(CBSE, All India 2013)

((I) Dr. Machinery A/c by` 7,00,000, Dr. Debtors A/c by ` 2,50,000, Dr. Stock A/c by ` 5,00,000, Dr. Building

A/c by ` 1,50,000, Cr. Bills Payable A/c by ` 2,50,000, Cr. Sonia Ltd. by ` 22,00,000 and Cr. Capital

Reserve A/c by ` 1,50,000; (ii) Dr. Sonia Ltd. by ` 22,00,000, Cr. Equity Share Capital A/c

by ` 20,00,000 and Cr. Securities Premium Reserve A/c by ` 2,00,000; Number of

Shares to be issued = ` 22,00,000 ÷ 110 = 20,000 Shares)

41. X Ltd. purchased machinery for ` 5,00,000 from Y Ltd. Half of the amount was paid by accepting a Bill of Exchange drawn by Y Ltd. payable after three months. The balance was paid by issue of Equity Shares of ` 10 each at a premium of 25%. Pass necessary Journal Entries in the books of X Ltd. for these transactions. (CBSE, Foreign 2012)

((i) Dr. Machinery A/c and Cr. Y Ltd. by ` 5,00,000;

(ii) Dr. Y Ltd. by ` 2,50,000 and Cr. Bills Payable A/c by ` 2,50,000;

(iii) Dr. Y Ltd. by ` 2,50,000, Cr. Equity Share Capital A/c by ` 2,00,000 and Cr. Securities Premium

Reserve A/c by ` 50,000; Number of Shares to be issued = ` 2,50,000 ÷ 12.50 = 20,000 Shares)

42. X Ltd. purchased a running business from Y Ltd. for a sum of ` 5,00,000 payable by the issue of fully paid Equity Shares of ` 100 each at a premium of 25%. The assets and liabilities consisted of the following: Building ` 3,00,000, Machinery 2,00,000, Sundry Debtors ` 1,00,000, Sundry Creditors ` 1,50,000. Pass the necessary Journal Entries in the books of X Ltd.

((i) Dr. Building A/c by ` 3,00,000, Dr. Machinery A/c by ` 2,00,000, Dr. Sundry Debtors A/c by ` 1,00,000,

Dr. Goodwill A/c by ` 50,000, Cr. Sundry Creditors A/c by ` 1,50,000 and Cr. Y Ltd. by ` 5,00,000;

(ii) Dr. Y Ltd. by ` 5,00,000, Cr. Equity Share Capital A/c by ` 4,00,000 and Cr. Securities Premium

Reserve A/cby` 1,00,000; Number of Shares to be issued = ` 5,00,000+ 125 = 4,000 Shares)

43. Pass necessary Journal Entries for the following transactions in the books of Sewak Ltd.: Purchased furniture of ` 5,00,000 from Ramprastha Ltd. The payment to Ramprastha Ltd. was made by issuing equity shares of ` 10 each at a premium of 25%. (CBSE, Foreign 2014)

(Dr. Furniture A/c and Cr. Ram Prastha Ltd. by ` 5,00,000; Dr. Ram Prastha Ltd. by ` 5,00,000,

Cr. Equity Share Capital A/c by` 4,00,000 and Cr. Securities Premium Reserve A/c by

` 1,00,000; Number of Shares to be issued = ` 5,00,000 + 12.50 = 40,000 Shares)

44. A Ltd. purchased a running business from B Ltd. for a sum of ` 1,50,000 payable by issue of 10,000 equity shares of ` 10 each at a premium of ` 2 per share and balance in cash. The assets and liabilities taken over were: Plant: ` 40,000: Building: ` 40,000; Debtors: 30,000; Stock: ` 50,000; Furniture: ` 20,000; Creditors: ` 20,000.

You are required to pass necessary Journal Entries for the above transactions in the books of A Ltd.

(CBSE, Delhi Comptt. 2014)

((i) Dr. Plant A/c by ` 40,000, Dr. Building A/c by ` 40,000, Dr. Debtors A/c by ` 30,000,

Dr. Stock A/c by ` 50,000, Dr. Furniture A/c by ` 20,000, Cr. Creditors A/c by ` 20,000,

Cr. A Ltd. by ` 1,50,000 and Cr. Capital Reserve A/c by` 10,000;

(ii) Dr. A Ltd. by ` 1,50,000, Cr. Cash A/c by ` 30,000, Cr. Equity Share Capital A/c by ` 1,00,000 and

Cr. Securities Premium Reserve A/c by ` 20,000)

45. King Ltd. issued 3,000 shares of ` 10 each credited as fully paid to the promoters for the services and issued 4,000 shares of ` 10 each credited as fully paid to the underwriters for their underwriting services. Pass the necessary Journal Entries in the books of King Ltd.

((i) Dr. Incorporation Expenses A/c and Cr. Share Capital A/c by ` 30,000;

(ii) Dr. Underwriting Commission A/c and Cr Underwriters' A/c by ` 40,000;

(iii) Dr. Underwriters' A/c and Cr. Share Capital A/c by ` 40,000)

Forfeiture and Reissue of Shares, Originally issued at Par

49. Mink Ltd. forfeited 1000 shares of ` 10 each issued at par for the non – payment of the final call of ` 2 per share. These shares were re – issued @ ` 8 per share fully paid up. Pass the necessary Journal Entries in the books of the company.

(Capital Reserve = 6,000)

50. Manohar Ltd. forfeited 500 Equity Shares of ` 10 each for the non – payment of first and final call of ` 3 per share. The forfeited shares were reissued for ` 12 per share. Pass the necessary Journal Entries in the books of the company. (Capital Reserve = 3,500)

51. Pass Journal Entries for the forfeiture and re – issue in the following cases:

(i) Jaypee Ltd. forfeited 500 shares of ` 10 each fully called up for non – payment of first call of ` 2 per share and final call of ` 2 per share. All of these shares were re – issued as fully paid for ` 8 per share.

(ii) Bricks Ltd. forfeited 800 shares of ` 10 each fully paid up, on which the holder has paid only the application money of ` 3 per share. Out of these, 500 shares, were reissued at ` 11 per share, fully paid up. (Capital Reserve: (i) = ` 2,000, (ii) ` 1,500)

52. Alliance Ltd. forfeited 1,000 shares of` 10 each, ` 7.50 per share called up, on which ` 5 per share has been paid by Hah, the amount of the first can of ` 2.50 per share being unpaid. The directors reissued the forfeited shares to Shyam, credited as ` 7.50 per share paid up, for a payment of ` 5 per share. Give Journal Entries to record the forfeiture and reissue of the shares.

(Capital Reserve = 2,500)

53. ABC Ltd. issued 2,000 equity shares of ` 10 each issued at par, payable as below:

On Application ` 4 per shares

On Allotment ` 2 per shares

On First and Final Call ` 4 per shares

All the amount due and duly received except allotment and call money on 200 shares, held by Manish. All these shares were forfeited after the call and reissued @ ` 8 per share fully paid up. Pass Journal Entries in the books of the company. (Capital Reserve = 400)

54. Deeds Ltd. issued 80,000 shares of ` 10 each payable as: ` 3 on application, ` 2 on allotment, ` 3 on first call and ` 2 on final call. All the shares were subscribed and allotted. X the holder of 400 shares failed to pay both the calls and his shares were forfeited. These shares were re – issued at ` 9 per share, as fully paid up. (Capital Reserve = 1,600)

55. Pass Journal Entries for the forfeiture and re – issue in the following cases:

(a) Harsh Ltd. forfeited 400 shares of Shyam of ` 10 each fully called up for non – payment of final call of ` 2 per share and reissued to Amit as fully paid for ` 10 per share.

(b) A Ltd. forfeited 300 shares of ` 10 each, called up, for non – payment of First Call of ` 2 per share. Out of these, 100 shares were immediately reissued at ` 6 per share.

(c) KP Ltd. forfeited 600 shares of ` 10 each, on which first call of ` 3 per share was not received; the second and final call of ` 2 per share has not yet been called. Out of these, 200 shares were re – issued as ` 8 paid – up for ` 7 per share.

(Hint: Capital Reserve: (a) ` 3,200; (b) ` 400; (c) `800)

Forfeiture and Reissue of Shares, Originally issued at Premium

56. Kanodia Ltd. issued 5,000 shares of ` 100 each at a premium of ` 10 each payable as ` 30 on application, ` 40 (including premium) on allotment and ` 40 on First and final call.

All the amounts were duly received, except allotment and first and final call on 100 shares held by Amit. These shares were forfeited and reissued as fully paid @ ` 105 per share. Pass necessary Journal Entries in the books of the Company. (Hint: Capital Reserve = ` 3,000)

57. ABC Ltd. forfeited 150 Equity shares of ` 10 each issued at a premium of ` 5 per share, for non – payment of allotment money of ` 8 per share (including premium of ` 5 per share), the first call of ` 2 per share and the final call of ` 3 per share. Out of these 100 equity shares were reissued at ` 14 per share. Give Journal Entries in the books of the company to record the forfeiture and reissue of shares.

(Hint: Capital Reserve = t200)

58. Y Ltd. forfeited 1,500 shares of ` 10 each (` 7 called – up) for non – payment of the allotment money of ` 4 per share including ` 1 as premium. Of these, 1,000 shares were reissued to M at ` 6 per share as ` 7 called – up. Journalise the above transactions in the books of Y Ltd. (CBSE, All India 2006)

(Hint: Capital Reserve = ` 3,000)

59. Manohar Ltd. forfeited 50 shares of ` 100 each issued at 10% premium on which allotment money of ` 30 per share (including premium) and first call of ` 30 per share were not received, the second and final call of ` 20 per share was not yet called.

20 of these shares were re – issued as ` 80 called up for ` 80 per share. Pass Journal Entries regarding forfeiture and re – issue of shares. (Hint: Capital Reserve = ` 600)

60. Moon Ltd. forfeited 50 shares of ` 100 each issued at 10% premium for non – payment of allotment money of ` 30 per share (including premium) and first call of ` 30 per share. The second and final call of ` 20 per share was not yet called. 20 of these shares were re – issued at ` 70 per share as fully paid – up. Pass Journal Entries regarding forfeiture and re – issue of shares. (Hint: Capital Reserve = Nil)

61. ABC Ltd. forfeited 100 shares of ` 10 each issued at a premium of ` 2 (to be paid at the time of allotment) on which the first call money of ` 3 was not received, the final call money of ` 2 is not yet called. These shares were subsequently reissued at ` 7 per share ` 8 paid up. Give the necessary Journal Entries regarding, forfeiture and reissue of shares. (Hint: Capital Reserve = 7400)

62. Shyam Ltd. forfeited 200 shares of ` 10 each issued at a premium of ` 3 per share, on which the first call money of ` 4 was not received and final call money of ` 1 is not yet called. These shares were subsequently reissued at ` 5 per share ` 9 paid up. Give the necessary Journal Entries regarding, forfeiture and reissue of shares. (Hint: Capital Reserve = 7200)

63. Give Journal Entries for forfeiture and reissue of shares:

(a) JP Ltd. forfeited, 800 shares of ` 10 each, issued at 30% premium for non – payment of allotment money of ` 5 per share (including premium) and first call of ` 2 per share. The second and final call of ` 2 has not yet been called. Out of these, 200 shares were reissued as fully paid up for ` 11 per share.

(b) XYZ Ltd. forfeited 1,000 shares of ` 10 each, ` 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non – payment of allotment money of ` 4 per share (including premium) and first call of ` 2 per share. Out of these, 600 shares were reissued as fully paid for ` 8.50 per share (Hint: Capital Reserve: (a) 7800; (b) 7900)

64. A company forfeited 100 equity shares of ` 10 each, issued at a premium of ` 5 per share for non – payment of allotment money of ` 8 per share (including share premium ` 5 per share), and the first and final call of ` 5 per share. (Application money of ` 2 per share has been received). Out of these, 60 equity shares were subsequently reissued at ` 14 per share. Give the necessary Journal Entries for forfeiture and reissue of these shares. (Hint: Capital Reserve = ` 120)

65. R.K. Ltd. invited applications for issuing 70,000 Equity Shares of ` 10 each at a premium of ` 35 per share. The amount was payable as follows:

On Application : ` 15 (including ` 12 premium)

On Allotment : ` 10 (including ` 8 premium)

On First and Final Call : Balance

Applications for 65,000 shares were received and allotment was made to all the applicants. A shareholder, Ram, who was allotted 2000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards, the first and final call was made. Sohan, who had 3000 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 4000 shares were re – issued at ` 50 per share fully paid up. The re – issued shares included all the shares of Ram. Pass necessary Journal Entries for the above transactions in the books of R.K. Ltd. (CBSE, All India 2012) (Hint: Amount transferred to Capital Reserve = ` 16,000, i.e., 6,000 (Ram's Shares) + ` 10,000 (Sohan's Shares) Amount forfeited on Ram's Shares = `6,000 and Sohan's Shares = ` 15,000)

66. Shyam Ltd. invited applications for issuing 80,000 Equity Shares of ` 10 each at a premium of ` 40 per share. The amount was payable as follows:

On Application ` 35 (including ` 30 premium)

On Allotment ` 8 (including ` 4 premium)

On First and Final Call : Balance

Applications for 77,000 shares were received. Shares were allotted to all the applicants. Sundram to whom 7,000 shares were allotted failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the first and final call was made. Satyam the holder of 500 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 1,000 shares were re – issued at ` 50 per share fully paid up. The re – issued shares included all the shares of Satyam. Pass necessary Journal Entries for the above transactions in the books of Shyam Ltd.

(CBSE,Delhi2012)

(Hints: (i) Amount transferred to Capital Reserve: `4,500 + `2,500 = `7,000.

(ii) Bank A/c: 726,95,000 (Application) + `5,60,000 (Allotment) + `4,86,500 (Call) + 750,000 (Reissue).

(iii) Securities Premium Reserve: on Application = `2,31,000; on Allotment = ` 3,08,000; on Call

= ?'4,20,000.(iv) Securities Premium Reserve: On Forfeiture = `3,000 (Dr.) On Reissue = 740,000 (Cr.))

Forfeiture and Reissue of Shares, Originally issued at Par or Premium

67. Record the Journal Entries for forfeiture and reissue in the following cases:

(a) X Ltd. forfeited 200 shares of ` 100 each, ` 70 called up, on which the shareholders had paid application and allotment money of ` 50 per share. Out of these, 150 shares were reissued to Naresh as ` 70 paid – up for ` 80 per share.

(b) Y Ltd. forfeited 180 shares of 10 ? each, ` 8 called up, issued at a premium of ` 2 per share to R for non – payment of allotment money of ` 5 per share (including premium). Out of these, 160 shares were reissued to Sanjay as ` 8 called up for ` 10 per share fully paid – up.

(CBSE, All India 2013) (Hint: Capital Reserve: (a) ` 7,500; (b) `800)

68. Pass necessary Journal Entries in the books of the company for the following transactions: G. Ltd. forfeited 7,000 equity shares of ` 100 each for the non – payment of first call of ` 30 per share. These shares were issued at a premium of ` 30 per share. The second and final call of ` 20 per share was not yet made. The forfeited shares were reissued at ` 80 per share fully paid – up.

(CBSE, All India Comptt. 2013)

(Hint: Capital Reserve: ` 2,10,000)

69. Record the Journal Entries for forfeiture and reissue in the following cases:

(i) X Ltd. forfeited 60 shares of ` 10 each, ` 7 called up, on which the shareholder had paid application and allotment money of ` 5 per share. Out of these, 45 shares were re – issued to Naresh as ` 7 paid up for ` 8 per share.

(ii) Y Ltd. forfeited 300 shares of ` 10 each, ` 8 called up, issued at a premium of ` 2 per share to 'R' for non – payment of allotment money of ` 5 per share (including premium). Out of these, 210 shares were re – issued to Sanjay as ` 8 called up for ` 10 per share fully paid up.

(CBSE, Foreign 2013) (Hint: Capital Reserve: (i) ` 225; (ii) ` 1,050)

70. Journalise the following transactions in the books of Poonam Ltd: (CBSE, Delhi 2002)

(a) 1,000 shares of ` 10 each issued at par were forfeited for the non – payment of the final call of ` 2 per share. These shares were reissued @ ` 8 per share fully paid – up .

(b) 50 shares of ` 10 each issued at a premium of ` 5 each payable with allotment were forfeited for the non – payment of allotment money of ` 9 per share including premium. The first and final call on these shares at ` 3 per share was not made. The forfeited shares were reissued @ ` 12 per share fully paid – up.

(Hint: Capital Reserve: (a) ` 6,000; (b) ` 150)

71. JCV Ltd. forfeited 200 shares of ` 10 each issued at a premium of ` 2 per share for the non – payment of allotment money of ` 3 per share (including premium). The first and final call of ` 4 per share has not been made as yet. 50% of the forfeited shares were re – issued at ` 8 per share fully paid up. Pass necessary Journal Entries for the forfeiture and reissue of shares. (CBSE, Delhi Comptt. 2011)

(Hint: Capital Reserve = ` 300)

72. Veer Ltd. invited for issuing 1,00,000 equity shares of ` 500 each at a premium of ` 100 per share. The amount was payable as follows: ` 200 on Application, ` 300 (including premium) on Allotment and balance on First call and Final Applications for 2,00,000 shares were received.

Applications for 50,000 shares were rejected and the application money was refunded. Pro rata allotment was made to the remaining applicants. Amount overpaid with application was adjusted towards the sum due on allotment.

All calls were made and were duly received except the first and final call on 100 shares allotted to Vasu. These shares were forfeited. The forfeited shares were reissued to Ravi for ` 60,000 fully paid up. Pass the necessary Journal Entries in the books of the company for the above transactions.

(CBSE, Delhi Comptt. 2009) (Hint: Capital Reserve = ` 40,000)

73. Z Ltd. invited applications for issuing 40,000 equity shares of ` 10 each at a premium of ` 2 per share. The amount was payable as follows:

On Application ` 6 (including premium) and balance on Allotment.

Applications for 50,000 shares' were received. Pro – rata allotment was made to all applicants. Excess money received on application was adjusted towards sums due on allotment. A shareholder to whom

8,000 shares were allotted failed to pay the allotment money and therefore, his shares were forfeited. Later on the forfeited shares were re – issued for ` 70,000 as fully paid up.

Pass necessary Journal Entries in the books of Z Ltd. (CBSE, Delhi 2005 (I))

(Hint: Amount received on allotment = ` 1,44,000; Capital Reserve = ` 34,000)

74. Seema Ltd. invited applications for issuing 2,00,000 equity shares of ` 10 each at a premium of ` 3 per share. The amount was payable as follows:

On Application ` 5 (including premium)

On Allotment : ` 4 per share

On First and Final Call Balance

Applications for 2,60,000 shares were received. Applications for 20,000 shares were rejected. To the remaining applicants, shares were allotted on pro – rata basis. Excess money received on application was adjusted with the sum due on allotment. All calls were made and were duly received except the first and final call of Mr. Sudhir who applied for 2,400 shares. His shares were forfeited. The forfeited shares were re – issued for ` 28,800 fully paid – up.

Pass the necessary Journal Entries for the above transactions in the books of the company.

(CBSE, Foreign 2008)

(Hint: Capital Reserve = ` 12,000)

75. Bharat Ltd. invited applications for 40,000 Equity Shares of ` 100 each at a premium of ` 20 per share. The amount was payable as follows: on application ` 30 per share on allotment (including premium) ` 70 per share on first and final call balance of the amount Applications for 60,000 shares were received. Applications for 10,000 shares were rejected and the application money on these shares was refunded. Pro rata allotment was "made to the remaining applicants and excess money received from them with applications was adjusted towards the sum due on allotment. All calls were made and were duly received except the first and final call on 500 shares allotted to Rajan. These shares were forfeited. The forfeited shares were afterwards reissued for ` 51,000 fully paid – up.

Pass the necessary Journal Entries in the books of the company for the above transactions.

(CBSE, All India 2009)

(Hint: Amount forfeited on Rajan's Shares = ` 40,000; Capital Reserve = ` 40,000)

76. X Ltd. issued 50,000 shares of ` 10 each at a premium of ` 2 per share payable as follows:

On Application ` 3

On Allotment ` 6 (including ` 2 premium)

On First and Final Call : ` 3

Applications were received for 75,000 shares and pro rata allotment was made as follows: To the applicants of 40,000 shares, 30,000 shares were issued and for the rest 20,000 shares were issued. All money due was received except the allotment and call money from Ram who had applied for 1,200 shares (out of the group of 40,000 shares). All his shares were forfeited. The forfeited shares were reissued for ` 8 per share fully paid – up. Pass the necessary Journal Entries for the above transactions.

(CBSE, All India 2010)

(Hint: Amount received on allotment = ` 2,20,500; Amount forfeited on

Ram's Shares = ` 3,600; Capital Reserve = ` 1,800)

77. Sangam Ltd. invited applications for issuing 80,000 equity shares of ` 10 each. The amount was payable as follows:

On Application ` 2

On Allotment : ` 4

On First and Final Call : ` 4

Applications for 1,00,000 shares were received. Allotment was made on pro rata basis to all the applicants. Excess money received on application was adjusted on sums due on allotment. Satnam, who had applied for 1,000 shares, failed to pay the allotment money and his shares were immediately forfeited. Harnam did not pay the first and final call on 800 shares allotted to him. His shares were also forfeited. All the forfeited shares were reissued at ` 12 per share fully paid – up. Pass necessary Journal Entries in the books of Sangam Ltd. for the above transactions. Also show your workings clearly.

(CBSE, All India Comptt. 2013)

(Hint: Amount forfeited= ` 2,000 (Satnam) + 74,800 (Harnam) = 76,800.

Amount transferred to capital reserve = 7 6,800.

78. Hema Ltd. invited applications for issuing 30,000 equity shares of ` 100 each at a premium of ` 20 each. The amount was payable as follows:

On Application and Allotment : ` 40 (including premium ` 10)

On First Call : ` 50 (including premium of` 10)

On Second and Final Call : Balance

Applications for 75,000 shares were received. Applications for 15,000 shares were rejected and the money received from them was refunded. Shares were allotted on pro rata basis to the remaining applicants. All calls were made.

A who had applied for 2,000 shares failed to pay the first call and second and final call on the shares allotted to him. B who was allotted 1,000 shares failed to pay the second and final call. The shares of both A and B were forfeited. The forfeited shares were reissued at ` 160 fully paid.

Pass the necessary Journal Entries in the books of the company for the above transactions.

(CBSE, Foreign 2011)

(Hint: Capital Reserve = ` 1,40,000)

79. D.R Shah Company Ltd. made an issue of 1,00,000 Equity Shares of ` 10 each at a premium of 30% payable as follows: on application ` 3.50 per share, on allotment ` 6.50 per share, on First and final call  –  balance. Applications were received for 2,00,000 Equity Shares and the directors made pro rata allotment. Harsh who had applied for 1,600 shares, did not pay the allotment and final call money. As a result his shares were forfeited. Later on 60% of the forfeited shares were reissued at ` 8 per share fully paid – up. Pass the necessary Journal Entries for the above mentioned transactions in the books of the company. (CBSE, All India Comptt. 2011)

(Hint: Amount due but not paid on allotment by Harsh = ` 2,400; Amount received on Allotment = ` 2,97,600; Capital Reserve = ` 2,400)

80. S India Ltd. issued for public subscription 50,000 equity shares of ` 10 each at a premium of ` 2 per share payable as under:

On Application ` 2

On Allotment ` 5 per shares (including premium)

On First and Final Call ` 5 per share

Applications were received for 60,000 shares. Allotment was made on pro – rata basis to all the applicants. Money overpaid on application was applied towards sum due on allotment. A to whom 500 shares were allotted tailed to pay the allotment and call money. B to whom 2,000 shares were allotted failed to pay the final call. The shares of A and B were subsequently forfeited after the first and final call was made. All the forfeited shares of B were reissued at ` 7 per share as fully paid.

Pass the Journal Entries in the books of S India Ltd. to record the above transactions.

(CBSE, Delhi Comptt. 2005)

(Hint: Capital Reserve = ` 4,000)

Employees Stock Option Plan (ESOP)

81. Mercury Ltd. granted 1,000 options of` 10 each on 1st April, 2012 at` 33 per share when the market price was ` 78 per share. The vesting period was 3 years. The maximum exercise period was 1 year. All the 1,000 options were exercised by the employees on 30th May, 2015. Pass necessary Journal Entries recording the above transactions.

(Hint: Value of Options = ` 45,000; Amount to be recognised as an expense in each year = ` 15,000)

82. Star Ltd. granted 2,000 options of ` 10 each on 1st April, 2012 at ` 40 per share when the market price (fair price) was ` 85 per share. The vesting period was 3 years and the maximum exercise period was 1 year. Out of the total options, only 1,400 options were exercised by the employees on 31st July, 2015. Pass necessary Journal Entries recording the above transactions.

(Hint: Value of Options = ` 90,000; Amount to be recognised as an expense in each year= ` 30,000; Amount to be transferred to General Reserve  –  ` 27,000)

Miscellaneous Questions

83. K. Ltd. was registered with a capital of ` 3,00,000 divided into equity shares of ` 100 each. The company offered to the public 2,000 shares at a premium of ` 10 per share payable as ` 20 on application, ` 40 on allotment including premium and ` 50 on first and final call per share. Applications were received for 3,000 shares of which applications for 500 shares were rejected and the balance allotted on a prorata basis. The excess application money was adjusted towards the allotment. All the sums due were received except for the allotment and call money on 100 shares held by Suresh. Mohan who held 200 shares paid the call money along with the allotment money.

Pass the necessary Journal Entries to record the transactions in the books of K Ltd.

(CBSE, Delhi Comptt. 2007)

(Hint: Amount Received on Allotment = 80,000  –  10,000 (excess application money adjusted)  –  3,500 (amount due from Suresh) + 10,000 (calls – in – advance) = ` 76,500)

84. R.J. Ltd. invited applications for issuing 3,00,000 equity shares of ` 10 each at a premium of 10%.The amount was payable as follows: ` 4 on Application and Balance on Allotment (including premium) Applications for 4,00,000 equity shares were received and pro – rata allotment was made to all the applicants. Excess money received on application was adjusted towards sums due on allotment. Somu who was allotted 6,000 shares failed to pay the allotment money. His shares were accordingly forfeited, The forfeited shares were reissued at ` 9 per share as fully paid up.

Pass the necessary Journal Entries in the books of the company. (CBSE, Foreign 2005)

(Hint: Capital Reserve = ` 26,000)

85. Prakash Engineering Company issued for public subscription 40,000 equity shares of ` 10 each at a premium of ` 2 per share, payable as under: ` 2 on Application, ` 5 on Allotment (including premium), ` 2 on First call and ` 3 on Final call.

Applications were received for 75,000 equity shares. The shares were allotted pro – rata to the applicants of 60,000 shares only, the remaining applications being rejected. Money overpaid on application was utilised towards the sum due on allotment. Ashok' to whom 3,000 shares were allotted failed to pay the allotment money and the two calls. 'Baneet' who applied for 3,000 shares paid the calls money along with allotment money. Pass the Journal Entries to record the above transactions.

(CBSE, Delhi Comptt. 2008)

(Hint: Amount Received on Allotment = 2,00,000  –  40,000 (excess application money adjusted)  –  12,000 (amount due from Ashok) + 10,000 (calls – in – advance) = ` 1,58,000)

86. LCM Ltd. invited applications for issuing 2,00,000 equity shares of ` 10 each at a premium of 13 per share. The amount was payable as follows: On application and allotment: ` 8 per share (including premium); On first and final call: the balance amount.

Applications for 3,00,000 shares were received. Applications for 50,000 shares were rejected and money refunded. Shares were allotted on pro rata basis to the remaining applicants. First and final call was made and was duly received except on 2,500 shares applied by Kanwar. His shares were forfeited. The forfeited shares were reissued at ` 7 per share fully paid up. Pass necessary Journal Entries for the above transactions in the books of the company. (CBSE, Foreign 2014)

(Hint: Capital Reserve = ` 8,000)

87. Arti Ltd. invited applications for issuing 80,000 shares of ` 10 each at a premium of ` 4 per share. The amount was payable as follows: On application: ` 5 per share; On allotment: ` 9 per share (including premium).

Applications were received for 1,40,000 shares. Allotment was made on the following basis:

(i) To applicants for 80,000 shares: 60,000 shares

(ii) To applicants for 60,000 shares: 20,000 shares

Money overpaid on applications was utilised towards sum due on allotment. Rajiv belonging to category (i), who had applied for 1,200 shares failed to pay his dues and his shares were forfeited. Pass the Journal Entries in the books of Arti Ltd. to record the above transactions.

(CBSE, Sample Paper 2009)

(Hint: Allotment money not paid by Rajiv = ` 6,600; Amount Received on Allotment = ` 4,13,400)

88. Pass necessary Journal Entries in the following cases:

(a) Q Ltd. forfeited 2,000 equity shares of ` 10 each issued at ` 14 per share for non – payment of final call of ` 7 (including premium) per share. The forfeited shares were reissued as fully paid up for` 16,000.

(b) R Ltd. forfeited 200 equity shares of ` 10 each issued at a premium of ` 5 per share payable along with allotment, for the nonpayment of allotment money of ` 8 per share (including premium).

Application money was ` 2 per share. The forfeited shares were reissued for ` 2,000 as fully paid. (CBSE, Delhi Comptt, 2004)

(Capital Reserve: (a) ` 10,000, (b); ` 400)

89. Journalise the following transaction of forfeiture and reissued shares:

(a) ABC Ltd. issued 20,00,000 equity shares of ` 100 each at a premium of 25% payable on application. The company forfeited 500 shares of Hari for non – payment of first call of ` 10 per share, the second and final call of ` 20 per share has not yet been called. The company reissued 400 of these shares at ` 70 per share credited as ` 80 paid up.

(b) Smart Ltd. forfeited 200 shares of ` 10 each, ` 8 called up, issued at a premium of ` 2 per share, for non – payment of allotment money of ` 5 per share, including the premium. 150 of these shares were reissued as ` 8 called up for ` 6 per share.

(c) Style Ltd. forfeited 600 shares of ` 50 each issued at 10% premium payable on allotment for non – payment of final call of ` 8 per share. 400 of these shares were re – issued as fully paid up for ` 55 per share. (Capital Reserve: (a) = ` 24,000, (b) ` 450, (c) ` 16,800)

90. Harsh Ltd. issued a prospectus inviting applications for 20,000 Equity shares of ` 10 each at a premium of ` 5 per share, payable as:

On Application : ` 4 (including ` 1 premium)

On Allotment : ` 4 (Including ` 2 premium)

On First : ` 4 (including ` 1 premium)

On Second and Final Call : ` 3 (including ` 1 premium)

Applications were received for 30,000 Equity shares and allotment was made on pro rata basis.

(i) Ansh, who applied for 600 Equity shares failed to pay the allotment money and on his subsequent failure to pay the first call, his Equity shares were forfeited.

(ii) Karan, who was allotted 1,200 Equity shares failed to pay the two calls and on his such failure,

his Equity shares were forfeited.

Of the Equity shares forfeited, 1,000 Equity shares were reissued (including whole of Ansh's Equity shares) to Gopal as fully paid – up for ` 8 per share. Pass necessary Journal Entries in the books of the company. (Capital Reserve = ` 3,000)

91. Hariom Ltd, issued for public subscription 1,00,000 equity shares of ` 10 each at premium of 20% payable as follows:

On Application : ` 2

On Allotment : ` 4 (including ` 2 premium)

On First : ` 5

On Second and Final Call : ` 1

Applications were received for 1,90,000 shares. The shares were allotted pro rata to the applicants for 1,50,000. Money overpaid on application was utilised towards payment due on allotment and money refunded where no allotment was made.

(a) Vineet to whom 1,000 shares were allotted, expressed his inability to pay allotment money. These shares were forfeited just after allotment.

(b) Vijay who applied for 3.000 shares, did not pay the allotment and 1st call money. These shares were forfeited before demanding the final call.

(c) Ravi did not pay the two calls on his 4,000 shares. These shares were forfeited after the final call was made.

All the forfeited shares were reissued to Naman as fully paid up at ` 8 per share. Pass Journal Entries required to record the above transactions. (Capital Reserve = ` 11,000)

92. Bhamashah Company Limited made an issue of 1,00,000 equity shares of ` 10 each at a premium of 20% payable as follows:

On Application ` 2.50 per share

On Allotment ` 4.50 per share

On First and Final Call Balance

Applications were received for 2,00,000 equity shares and the directors made pro – rata allotment. Ranu, who had applied for 800 shares did not pay the allotment and final call money, with the result that his shares were forfeited. Later on 80% of the forfeited shares were reissued at ` 8 per share fully paid up.

Pass the necessary Journal Entries for the above mentioned transactions in the books of the company. (CBSE, Delhi Comptt. 2011)

(Hint: Capital Reserve = ` 960)

93. Amrit Ltd. issued 50,000 shares of ` 10 each at a premium of ` 2 per share payable as ` 3 on application, ` 4 on allotment (including premium), ` 2 on first call and the remaining on second call. Applications were received for 75,000 shares and a pro – rata allotment was made to all the applicants. All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited.The forfeited shares were reissued for` 9,600. Final call was not made. Pass necessary Journal Entries. (CBSE, Sample Paper 2015)

(Hint: Allotment money not paid by Sonu = ` 2,000; First Call money not paid by Sonu = ` 1,600;

Capital Reserve = ` 3,600)