Accounting For Share Capital

ACCOUNTING FOR SHARE CAPITAL
SHARE CAPITAL OF A COMPANY

 Share capital refers to the amount the company can raise or has raised
through issue of shares.
 Share: Capital of a company is divided into units of smaller denominations
and each unit is called a share.
TYPES OF SHARES
 As per section 43 of Companies Act, 2013 ; Share capital of a company can
be divided into two classes:
(a) Preference Shares
(b) Equity Shares
(A) PREFERENCE SHARES: Preference shares are the shares which carry the two
preferential rights:
(a) Preference shareholders are paid dividend at a fixed rate or a dividend of
fixed amount before it is being paid to equity shareholders.
(b) Capital of preference shareholder is returned before that of equity shares
at time of winding up.
(B) EQUITY SHARES: Equity shares are those shares which are not preference
shares.
CLASSIFICATION OF SHARES (FROM ACCOUNTING POINT OF VIEW)

 As per Schedule 3 of companies act, 2013 ; share capital of a company can
be divided into three categories:
(a) Authorised Capital
(b) Issued Capital
(c) Subscribed Capital
(A) AUTHORISED CAPITAL (NOMINAL CAPITAL)
 It refers to the maximum amount that a company can raise as share capital
and it mentioned in the Memorandum of Association.
 It is also called Registered capital of the company.%
Address: EQUILIBRIUM CLASSES, Beside Tirupati Balaji Temple, Rani Sati Mandir Lane, Ratu Road,
Ranchi, Jharkhand. Ph. No. 9840885790 pg. 1
(B) ISSUED SHARE CAPITAL
 Issued share capital is that part of authorized share capital that is issued for
subscription.
 Issued share capital includes:
(a) Shares issued to public for subscription.
(b) Shares issued for consideration other than cash.
(c) Shares subscribed by signatories of MOA.
(d) Shares taken by directors as qualifying shares.
(C) SUBSCRIBED SHARE CAPITAL

 It is that part of Issued share capital that is subscribed for the time being by
the members of the company.
 It is divided into two parts:
(a) Subscribed and Fully Paid
(b) Subscribed and Not Fully Paid
 Subscribed and Fully Paid: It consist of those shares on which :
(a) company has called the entire amount of face value , and
(b) Full amount has been received.
 Subscribed and not fully paid: It consist of those shares on which:
(a) Company has called full amount of face value but full amount has not been
received.
(b) Company has not yet called the full amount of face value.
QUESTIONS TO BE DONE IN CLASS

1. Equilibrium Classes Ltd. had an authorized share capital of ₹10,00,00,000 divided into
10,00,000 equity shares of ₹50 each and 10,00,000 preference shares of ₹50 each. The
directors of the company decided to issue only 50% of shares of each class. All the
preference shares and equity shares were duly subscribed and amount was duly
received except on 500 equity shares on which ₹30 per share was received and 1000
preference shares on which only ₹40 per share was received.
(a) Show the following in the balance sheet of the company as per schedule III, Part I of
Companies Act 2013.
(b) Also prepare Notes to Account.
2. Equilibrium Classes Ltd. had an authorized share capital of ₹1,00,00,000 divided into
10,00,000 equity shares of ₹10 each . The directors of the company decided to call only
₹8 per share and remaining amount is to be called as and when required. All the amount
was duly received except ₹2 per share on 500 shares.
(a) Show the following in the balance sheet of the company as per schedule III, Part I of
Companies Act 2013.
(b) Also prepare Notes to Account.
ISSUE OF SHARES
 A company can raise capital by issue of shares.
 Public Issue of Shares: It means offer made by a company to public for
subscription of shares.
 Private Placement of Shares: It means issue and allotment of shares to a
relatively small no. of selected group of investors such as banks, mutual
funds, other financial institutions privately and not to general public.
 Issue of shares can be:
(a) For cash
(b) For consideration other than cash
ISSUE OF SHARES FOR CASH

 It means company will receive payment against issue of shares.
 Shares may be issued at Par (at face value) or at Premium (above face
value).
 Issue Price may be called either in one installment or more than one
installments.
(A) ISSUE OF SHARES AT PAR
 It means Issue price of share is equal to face value of share.
3. (Issued at par and full amount was called in one installment) Equilibrium Classes ltd.
was registered with an authorized capital of ₹10,00,000 divided into 1,00,000 equity
shares of ₹10 each. Company issued 80,000 shares and Full amount was payable at time
of application only. Public subscribed for all the shares and all the money was duly
received. Pass necessary journal entries.
4. (Issued at Par and amount was called in installments) Equilibrium Classes ltd. issued
50,000 shares of ₹50 each which was payable as follows: On Application ₹20; On
Allotment ₹20 and ₹5 each on 2 calls. All the shares were duly subscribed by public and
full amount was duly received. Pass necessary journal entries.
(B) ISSUE OF SHARES AT PREMIUM

 It means issue price of share is greater than face value of share.
 Premium amount will be calculated as _____________________________.
 Premium amount will be credited to ______________________________.
 Share capital account will always be credited with the amount of _______
________________________________________________________.
 Securities premium is a capital receipt.
 Premium amount is calculated on face value of share if premium is given as
a %.
Securities Premium Account VS. Securities Premium Reserve Account
 Section 52(1) of Companies Act, 2013 requires that the amount of
premium should be credited to Securities Premium Account.
 Schedule III of Companies Act, 2013 uses the head of Securities Premium
Reserve.
 You can use either of the term to pass the necessary journal entry.
SECTION 52 (2) OF COMPANIES ACT 2013

 As per Section 52(2) of Companies Act, 2013 ; a company can use amount
lying in securities premium account for following purposes:
(a) To write off Preliminary Expenses of the company.
(b) To issue fully paid bonus shares to the members.
(c) To buy back (purchase) its own shares.
(d) To pay premium on redemption of preference shares or debentures.
(e) To write off any expenses or discount allowed while issue of debentures or
any other securities.
DISCLOSURE IN BALANCE SHEET

 Securities Premium Reserve will appear on Equity and liabilities side of
Balance sheet under the head ‘’ Shareholder’s Fund’’ and under the sub
head ‘’ Reserve and Surplus’’.
 If the question is silent, it is assumed that amount of securities premium

is due with allotment money.
5. SSS ltd. has a paid up share capital of ₹60,00,000 and a balance of ₹15,00,000 in the
securities premium reserve account. The management of company does not want to
carry over this balance. State the purpose for which this balance can be utilized.
[Delhi 2010] [TS Grewal Scanner 4]
6. (Issue of shares at premium and amount payable in lump sum) Equilibrium Classes Ltd.
issued 20,000 shares of ₹20 each @10% premium. Full amount was payable with
application. All the shares were duly subscribed and full amount was duly received. Pass
necessary journal entries.
7. (Issue of shares at premium and amount payable in installments) Equilibrium classes ltd.
issued 60,000 shares of ₹10 each, issued at ₹2 premium per share. Amount was payable
as follows: On Application ₹4 per share; On Allotment ₹5 per share (including ₹1
premium) and Balance on first and final call. All the shares were duly subscribed and full
amount was duly received. Pass necessary journal entries and prepare Balance sheet of
the firm.
8. The authorized capital of Suhani Ltd. is ₹45,00,000 divided into 30,000 shares of ₹150
each. Out of these company issued 15000 shares at a premium of ₹10 per share. The
amount was payable as follows: ₹50 per share on application, ₹40 per share on
allotment (including premium); ₹30 per share on first call and balance on final call.
Public applied for 14000 shares. All the money was duly received. Prepare an extract of
Balance Sheet of Suhani Ltd. as per Schedule III of Companies Act 2013. Also prepare
notes to accounts for the same. [D 2013] [TS Grewal Scanner 15]
CALLS IN ARREARS
 If a shareholder fails to pay amount due on any of the installments then the
amount not received is called Calls in Arrears.
 The company can charge interest on calls in arrears from the due date till the
date of payment, if authorized by its Article of Association.
 If Article of Association is silent in this respect then Table F of Companies
Act, 2013 is applicable which states that interest on calls in arrears should be
charged at 10% p.a.
 There are two methods to show calls in arrears in books of accounts:
(a) By opening calls in arrears account: In this situation we will pass a journal
entry to record calls in arrears in books of accounts.
(b) Without opening calls in arrears account: In this situation we will not record
calls in arrears account in journal but we will determine the same by
preparing the ledger account for respective installment and balancing figure
will be taken as calls in arrears.
9. Ghosh ltd. made second and final call on its 50,000 equity shares @₹2 per share on
January 1st 2006. The whole amount was received on 15th January 2006 except on 100
shares allotted to Venkat. Pass necessary journal entry for call money due and received:
(a) By opening Calls in arrears account
(b) Without opening calls in arrears account [AI 2006 C] [TS Grewal Scanner 1 and 22]
10. On 1st April 2014 Aradhana Ltd. was formed with an authorized capital of ₹90,00,000
divided into 90,000 shares of ₹100 each. The company invited application for issuing
75000 equity shares. The amount was payable as follows: On Application ₹20 per share;
On Allotment ₹50 per share and balance amount on first and final call. The issue was
fully subscribed and the company allotted shares to all the applicants. All the money
was duly received except the first and final call on 5000 shares.
Show Share Capital in the Balance sheet of the company as per schedule III of Companies
act 2013 as at March 31st 2015 and also show notes to accounts.
[AI 2013 C; TS Grewal Scanner 18]
CALLS IN ADVANCE
 A company may accept amount against the installment or installments not
yet made. The amount so received in advance is called Calls in Advance.
 Interest on Calls in Advance: If rate of interest is stated in Article of
Association then company has to pay interest accordingly on calls in advance.
But if AOA is silent regarding interest on calls in advance then Table F of
Companies Act 2013 is applicable which states that interest is to be paid
@12% p.a.
 Disclosure in Balance Sheet: Calls in advance appear in the Equity and
Liabilities side of Balance Sheet under the head Current Liabilities and sub
head other Current liabilities.
11. On 1st January 2016 the first call of ₹3 per share became due on 1,00,000 equity shares
issued by Kamini Ltd. Karan a holder of 500 shares did not pay the first call money. Arjun
a shareholder holding 1000 shares paid the second and final call of ₹5 per share along
with first call.
Pass necessary journal entry for the amount received by opening calls in arrears account
and calls in advance account in the books of the company. [D 2016] [TS Grewal exp. 30]
12. On 28th Feb 2016 the first call of ₹2 per share became due on 50,000 equity shares
allotted by Kumar Ltd. Komal a holder of 1000 shares did not pay the first call money
and Kovil a holder of 750 shares paid the second and final call of ₹4 per share along with
the first call. Pass necessary journal entry for the amount received by opening calls in
arrears account and calls in advance account in the books of the company. [AI 2016]
13. X ltd. with a nominal capital of ₹50,00,000 in equity shares of ₹10 each, issued 2,00,000
shares payable ₹2.50 per share on application, ₹2.5 per share on allotment and ₹5 per
share on first and final call three months later. All money payable on allotment was duly
received but one shareholder failed to pay allotment money on his 2500 shares, while
another shareholder who held 2000 shares paid for first and final call also along with
allotment. Give journal entries in the company’s books of accounts to record the above
transactions up to allotment of shares and show the company’s Balance sheet.
[AI 2007] [TS Grewal Scanner 2]
14. XYZ ltd. issued 8000 equity shares of ₹10 each. ₹5 per share was called, payable ₹2 on
application; ₹1 on allotment; ₹1 on first call and ₹1 on second and final call. All the
money was duly received with the following exceptions:
A who holds 250 shares paid nothing after application.
B who holds 500 shares paid nothing after allotment.
C who holds 1250 shares paid nothing after first call.
Pass necessary journal entries. [TS Grewal 24]
15. Bharat Ltd. made the first call of ₹2 per share on its 1,00,000 equity shares on 1 st
March,2006. Ashok, a shareholder, holding 800 shares paid the second and final call amount
along with first call money. The second and final call amount was ₹3 per share. Pass
necessary journal entries for recording the above using calls in advance account.
[AI 2006 C] [TS Grewal 25]
ISSUE OF SHARES FOR CONSIDERATION OTHER THAN CASH

16. A ltd. company issued 800 equity shares of ₹100 each at a premium of 25% as fully paid
up in consideration of the purchase of plant and machinery of ₹1,00,000. Pass necessary
journal entries. [TS Grewal 27]
17. Rajan ltd. purchased assets from Geeta & Co. for ₹5,00,000. A sum of ₹1,00,000 was paid
by means of a bank draft (cheque) and for the balance due Rajan Ltd. issued equity shares
of ₹10 each at a premium of 25%. Journalize the above transactions in the books of the
company. [TS Grewal 28] [Foreign 2004]
18. Sundaram ltd. purchased furniture for ₹3,00,000 from Ravindram ltd. ₹1,00,000 were
paid by drawing a promissory note [Bills payable] in favour of Ravindram ltd. 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 Sundaram ltd. [AI 2012] [TS Grewal Scanner 6]
19. 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. [AI 2013] [TS Grewal Scanner 9]
20. X ltd. purchased a running business from G. Ltd. for a sum of ₹18,00,000 payable by
issue of equity shares of ₹100 each at a premium of ₹20 per share. The assets and liabilities
consisted of the following:
Plant ₹3,50,000; Land ₹6,00,000; Stock ₹4,50,000 and Creditors ₹1,00,000.
Pass necessary journal entries in the books of X ltd. for the above transactions.
[AI 2014 C] [TS Grewal Scanner 12]
21. Samachar India Ltd. took over assets of ₹14,00,000 and liabilities of ₹4,00,000 from
News Ltd. for a purchase consideration of ₹9,19,000. Samachar India Ltd. issued a
promissory note of ₹17,000 after 60 days in favour of News Ltd. and the balance amount
was paid by issue of equity shares of ₹100 each at a premium of ₹25 per share.
Pass necessary journal entries for the above transactions in the books of Samachar India
Ltd. [Delhi 2016] [TS Grewal Scanner 13]
22. King Ltd. took over assets of ₹25,00,000 and liabilities of ₹6,00,000 of Queen Ltd. King
Ltd. paid the purchase consideration by issuing equity shares of ₹100 each at a premium of
10% and ₹11,00,000 by bank draft.
Calculate purchase consideration and pass necessary journal entries in the books of King
Ltd. [Sample paper 2016]
23. Sandesh Ltd. took over assets of ₹7,00,000 and liabilities of ₹2,00,000 from Sanchar Ltd.
for a purchase consideration of ₹4,59,500. ₹8,500 were paid by accepting a draft in favour
of Sanchar Ltd. payable after three months and the balance was paid by issue of equity
shares of ₹10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entry for the above transactions in the books of Sandesh Ltd.
[Delhi 2016] [TS Grewal 37]
24. Madhur Ltd. took over assets of ₹3,90,000 and liabilities of ₹40,000 of Rasova ltd. for a
consideration of ₹4,00,000. 20% was paid by cheque and the balance by issue of fully paid
equity shares of ₹100 each at a premium of 60%. Show necessary journal entries for these
transactions in books of Madhur Ltd. [Delhi 2017 C] [TS Grewal Scanner 14]
25. Sico Ltd. took over assets of ₹4,80,000 and liabilities of ₹80,000 of Mittal Ltd. for a
consideration of ₹3,20,000. ₹20,000 were paid by acceptance in favour of Mittal Ltd.
payable after months and balance by issue of fully paid up 8% preference shares of ₹100
each at a premium of 50%. Pass the necessary journal entries for the above transactions in
the books of Sico Ltd. [AI 2017 C] [TS Grewal Scanner 15]
26. X ltd. issued 2500 shares of ₹10 each as fully paid to promoters for their services and
issued 2000 shares of ₹10 each credited as fully paid to the underwriters for their
underwriting services. Journalise the following transactions. [TS Grewal Exp. 33]
27. Lights lamp limited issued 50,000 shares of ₹10 each as fully paid up to the promoters
for their services to set up the company. It also issued 2000 shares of ₹10 each credited as
fully paid up to underwriters of shares for their services. Journalise the transactions.
[TS Grewal 33]
28. Vibhuti Ltd. was formed with a capital of ₹30,00,000 divided into shares of ₹10 each.
Vibhuti Ltd. issued 10,000 shares of ₹10 each as fully paid up to the prmoters of the
company and 18,000 shares of ₹10 each as fully paid up to vendors against the purchase of
machinery and offered 58,500 shares of ₹10 each (₹6 called up) to public. The issue was
fully subscribed. All the money was duly received. Prepare an extract of Balance Sheet of
Vibhuti Ltd. showing share capital. [Model test Paper 2]
29. X Ltd. purchased machinery for ₹5,00,000 from Y ltd. Half of the amount was paid by
accepting a Bills 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.
[Foreign 2012] [TS Grewal Scanner 7]
30. A ltd. purchased the business of B ltd. for ₹90,000. Payment was made by issue of equity
shares of ₹10 each at 20% premium. Pass necessary journal entries in the books of A ltd.
31. Pass necessary journal entries for the following transactions in the books of Gopal Ltd.
(a) Purchased furniture for ₹2,50,000 from M/S Furniture Mart. The payment to M/S
Furniture Mart was made by issuing equity shares of ₹10 each at a premium of 25%.
(b) Purchased a running business from Aman Ltd. for a sum of ₹15,00,000. The payment of
₹12,00,000 was made by issue of fully paid equity shares of ₹10 each and the balance
by bank draft. The assets and liabilities consisted of the following:
Plant ₹3,50,000 ; Stock ₹4,50,000 ; Land and Building ₹6,00,000 and Sundry Creditors
₹1,00,000. [AI 2014] [TS Grewal exp. 34]
OVERSUBSCRIPTION OF SHARES
 It refers to a situation when no. of shares applied is greater than no. of
shares issued.
 Company cannot allot more shares than the no. of shares allotted.
 Thus there are three possible alternatives available to the company:
(a) Reject excess application

 Company can reject extra applications over and above no. issued and return
application money to those applicants whose applications have been
rejected.
(b) Pro-Rata Allotment

 In this situation company will allot shares to all the applicants but in a
particular ratio. An applicant will not get full amount of shares for which they
have applied.
(c) Reject some applications and allot shares to remaining applicants on a pro
rata basis
 It’s a combination of case (a) and case (b).
32. Guru Ltd. invited application for issuing 5,00,000 equity shares of ₹10 each at a premium
of ₹5 per share. Because of favourable market conditions, the issue was oversubscribed and
applications for 15,00,000 shares were received. Suggest the alternatives available to Board
of Directors for the allotment of shares. [AI 2015] [TS Grewal Exp. 16]
33. Good Co. Ltd. invited applications for 1,00,000 shares of ₹10 each payable: ₹3 on
application; ₹3 on allotment and the balance when required. 1,20,000 shares were applied
for. Applications were accepted for 1,00,000 shares and remaining applications were
rejected. Allotment money was received on 99,500 shares. Pass journal entries in books of
Good Co. Ltd. [TS Grewal Exp. 11]
34. 20,000 shares of ₹10 each were issued for public subscription at a premium of 10%. Full
amount was payable on application. Application were received for 30,000 shares and the
Board decided to allot the shares at pro-rata basis. Pass journal entries.
[TS Grewal Scanner 3]
35. [Issue is oversubscribed and full amount is paid on application] X ltd. invited applications
for 10,000 equity shares of ₹10 each issued at par. The amount was payable on application.
The issue was oversubscribed by 2000 shares and allotment was made on prorate basis.
Pass necessary journal entries. [TS Grewal 14]
36. To provide employment to the youth and to develop Baramula district of Jammu and
Kashmir, Jyoti power ltd. decided to set up a power plant. For raising funds the company
decided to issue 8,50,000 shares of ₹10 each at a premium of ₹3 per share. The whole
amount was payable on application. Application for 20,00,000 shares were received.
Applications for 3,00,000 shares were rejected and shares were allotted to the remaining
applicants on pro-rata basis. Pass necessary journal entries for the above transactions in
books of the company. [TS Grewal Exp. 13] [AI 2016]
CALCULATION OF AMOUNT RECEIVED ON ALLOTMENT
37. Sugandh Ltd. issued 60,000 shares of ₹10 each at a premium of ₹2 per share payable as
₹3 on application, ₹5 on allotment (including premium) and balance on first and final call.
Applications were received for 92,000 shares. The Directors resolved to allot as:
(a) Applicants of 40,000 shares – 30,000 shares
(b) Applicants of 50,000 shares – 30,000 shares
(c) Applicants of 2000 shares – Nil
Mohan, who had applied for 800 shares in category (i) and Sohan, who was allotted 600
shares in category (ii) failed to pay allotment money. Calculate amount received on
allotment. [TS Grewal 19]
38. Meena Ltd. issued 60,000 shares of ₹10 each at a premium of ₹2 per share payable as
₹3 on application, ₹5 on allotment (including premium) and the balance on first and final
call. Applications were received for 1,02,000 shares. The Directors resolved to allot as
follows:
Applications for 60,000 shares – 30,000 shares
Applications for 40,000 shares – 30,000 shares
Applications for 2,000 shares – Nil
Nikhil, who had applied for 1,000 shares in category A and Vish who was allotted 600 shares
in category B failed to pay allotment money. Calculate the amount received on allotment.
[AI 2009]
39. Nandan, a Director of “Nanda Agro Products Ltd.” proposed in a board meeting that to
inculcate the habit of savings among people he wanted to bring a special issue of shares.
His proposal was accepted by the company. The company issued 40,000 equity shares of
₹100 each. The share money per share was payable as: On Application – ₹30; On Allotment
– ₹50 and On first and final call ₹20. Raman, a farmer holding 80 shares could not pay his
call money on time. Nathan, another farmer holding 50 shares, paid the call money also
with allotment. Raman paid the amount due from him after four months explaining the
reason for delay; the company did not charge any interest from him.
(a) Calculate the amount received by company on allotment.
[Delhi 2016 C] [TS Grewal Scanner 25]
40. Ranjit, a Director of “Nanda Agro Products Ltd.” proposed in a board meeting that to
inculcate the habit of savings among people he wanted to bring a special issue of shares.
His proposal was accepted by the company. The company issued 70,000 equity shares of
₹100 each. The share money per share was payable as: On Application – ₹30; On Allotment
– ₹50 and On first and final call ₹20. Makhan, a farmer holding 50 shares could not pay his
call money on time. Nathan, another farmer holding 60 shares, paid the call money also
with allotment. Makhan paid the amount due from him after four months explaining the
reason for delay; the company did not charge any interest from him.
(b) Calculate the amount received by company on allotment.
41. MCS Ltd. issued 40,000 shares of ₹10 each payable as ₹2 per share on application, ₹4
per share on allotment and balance on two equal installments. Applications were received
for 80,000 shares and the allotment was made as follows:
(a) Applicants of 50,000 shares were allotted 30,000 shares.
(b) Applicants of 30,000 shares were allotted 10,000 shares.
Neeraj to whom 600 shares were allotted from category (a) failed to pay allotment money.
Pass journal entries up to allotment only. [AI 2009 C] [TS Grewal Exp. 18]
42. DN Ltd. issued 50,000 shares of ₹10 each payable as ₹2 per share on application, ₹3 on
allotment and ₹5 on first and final call. Applications were received for 70000 shares. It was
decided that:
(a) To refuse allotment to the applicants of 10,000 shares.
(b) To allot 20,000 shares to Mohan who applied for similar numbers.
(c) To allot the remaining shares on prorate basis.
Mohan failed to pay the allotment money and Sohan who belonged to category C and was
allotted 3000 shares paid the call money with allotment.
Calculate the amount on allotment. [Delhi 2010; TS Grewal Scanner 26]
43. X company issued ₹10,00,000 shares for subscription of ₹100 each at a premium of ₹20
per share payable as: ₹10 per share on application; ₹40 per share and ₹10 premium on
allotment and ₹50 per share and ₹10 premium on final payment. Over payment on
application were to be applied towards amount due on allotment and over payments on
application exceeding amount due on allotment was to be returned. Issue was
oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted
only 1000 shares and applicants for 2000 shares were sent letters of regret. All the money
due on allotment and final call was duly received. Pass necessary journal entries in the
company’s books to record the above transactions.
44. Sony Media Ltd. issued 50,000 shares of ₹10 each payable ₹3 0n application, ₹3 on
allotment and balance on first and final call. Applications were received for 1,00,000 shares
and allotment was made as follows:
(a) Applicants for 60,000 shares were allotted 30,000 shares.
(b) Applicants for 40,000 shares were allotted 20,000 shares.
Anupam to whom 1000 shares were allotted from category (i) failed to pay allotment
money. Pass journal entries up to allotment. [TS Grewal 20]
45. On 1st April 2015, Prarthana ltd. was formed with an authorized capital of ₹90,00,000
divided into 90,000 shares of ₹100 each. The Company invited applications for issuing
80,000 equity shares. The amount was payable as follows: On Application ₹30; On allotment
₹40 and balance amount on first and final call. Applications for 1,00,000 shares were
received. Applications for 20,000 shares were rejected and the application money was
refunded. All calls were made. A shareholder holding 600 shares did not pay the first and
final call.
Show share capital in the Balance sheet of the company as per schedule iii, part I of
Companies act 2013 as at March 31st 2016 and also show notes to account.
[AI 3013 C] [TS Grewal exp. 17]
FORFEITURE OF SHARES
 Forfeiture of shares means cancelling the shares for non-payment of calls
due.
 When shares are forfeited, share capital of the company gets reduced.
 The amount received is not refunded.
46. XYZ Ltd. issued 50,000 shares of ₹100 each at par payable ₹20 per share on application;
₹30 per share on allotment; ₹ 30 per share on first call and ₹20 per share on second and
final call.
Mr. A was allotted 500 shares. Pass journal entries relating to forfeiture of shares on
each of the following cases:
Case (a) If Mr. X failed to pay allotment money and his shares were forfeited.
Case (b) If Mr. X failed to pay allotment money and on his subsequent failure to pay first
call, his shares were forfeited.
Case (c) If Mr. X failed to pay first call and on his subsequent failure to pay second and final
call, his shares were forfeited.
47. A ltd. was registered with an authorized capital of ₹2,00,000 in ₹10 per equity shares,
of these 6,000 equity shares issued as fully paid to the vendor for purchase of building;
8,000 equity shares were subscribed for by the public and during the first year ₹5 per equity
share were called up, payable ₹2 on application, ₹1 on allotment , ₹1 on first call and ₹1 on
final call. The amount received in respect of these shares were:
On 6,000 equity shares the full amount was received
On 1250 equity shares ₹4 per equity share,
On 500 shares ₹3 per equity share,
On 250 shares ₹2 per equity share.
The company forfeited 750 equity shares on which less than ₹4 per equity share had been
paid. Pass journal entries in books of the company. [TS Grewal exp. 41]
48. Sun Pharma Ltd. is registered with an authorized capital of ₹1,00,00,000 divided into
1,00,000 equity shares of ₹100 each. The co. issued 50,000 shares at a premium of ₹40 per
share. A shareholder holding 500 shares did not pay the final call of ₹20 per share. His shares
were forfeited. Present share capital in the balance sheet of the company as per schedule
III of the companies act 2013. Also prepare notes to account.
[Delhi 2015 C; TS Grewal Scanner 22]
49. India Auto Ltd. is registered with an authorized capital of ₹7,00,00,000 divided into
7,00,000 shares of ₹100 each. The company issued 50,000 shares to the vendor for building
purchased and 2,00,000 shares were issued to the public. The amount was payable as
follows: On Application and allotment ₹20 per share; on first call ₹50 per share and balance
on second and final call. All calls were made and duly received except on 100 shares held
by Rajini, who failed to pay the second and final call. Her shares were forfeited. Present the
share capital in the balance sheet of the company as per schedule III of Companies Act,
2013. Also prepare Notes to Accounts.
[AI 2015 C; TS Grewal Scanner 23]
50. SRCC Ltd. issued 10,000 equity shares of ₹10 each at a premium of ₹2 per share. The
amount is payable as follows: On Application ₹4 per share; On allotment ₹5 per share
(including premium) and ₹3 per share on first and final call. Gaurav was allotted 200 shares.
Give journal entry relating to forfeiture of shares in each of the following cases:
(a) If Gaurav failed to pay allotment money and his shares were forfeited before making
the first and final call.
(b) If Gaurav failed to pay allotment money and on his subsequent failure to pay first and
final call, his shares were forfeited.
(c) If Gaurav failed to pay first and final call and his shares were forfeited.
[TS Grewal Exp. 42]
51. A company issued 10,000 equity shares of ₹10 each at a premium of ₹3 per share
payable ₹5 on application, ₹5 (including premium) on allotment and balance on first call.
All the shares offered were applied for and allotted. All the money due on allotment was
received except on 200 shares. Call was made. All the amount thereon was received except
on 300 shares. Directors forfeited 200 shares on which both allotment and call money was
not received. Pass journal entries to record the above. [TS Grewal 41]
52. A ltd. issued 10,000 equity shares of ₹100 each at ₹120 payable as follows: ₹25 on
application; ₹45 on allotment (including premium); ₹20 on first call and ₹30 on second and
final call. 9000 equity shares were applied for allotted. All the money was received with
exception of first call and final call on 200 equity shares held by Ram. These equity shares
were forfeited. Pass journal entries to record the above issue of shares.
53. Samprag Ltd. has an authorized capital of ₹20,00,000 divided into equity shares of ₹10
each. The company invited application for issuing 60,000 shares. Applications for 58,000
shares were received. All the calls were made and were duly received except the final call
of ₹3 per share on 2000 shares. These shares were forfeited.
(a) Present the share capital in the Balance Sheet of the company as per schedule III of the
Companies Act, 2013.
(b) Also prepare notes to account for same. [Delhi 2016 C] [TS Grewal Exp. 39]
54. Sajag Ltd. has an authorized capital of ₹30,00,000 divided into equity shares of ₹30 each.
The company invited application for issuing 70,000 shares. Applications for 68,000 shares
were received. All the calls were made and were duly received except the final call of ₹10
per share on 5000 shares. These shares were forfeited.
(c) Present the share capital in the Balance Sheet of the company as per schedule III of the
(d) Also prepare notes to account for same. [AI 2016 C] [TS Grewal Scanner 24]
REISSUE OF SHARES
 Forfeited shares become the property of company and the company can
reissue them at par, at premium or at discount.
Case (a) Reissued at Par

 It means reissue price is equal to paid up amount.
Bank a/c…….Dr.
To share capital a/c
(Being ……… shares reissued at ……………., ……. Paid up)
RULE FOR PAID UP AMOUNT (CALLED UP AMOUNT)

(a) If paid up amount (called up amount) is given at time of reissue then we
will take that amount as paid up or called up amount.
(b) If paid up amount is not given at time of reissue, then:
 If fully paid up (fully called up) word is written in question then Paid up
amount is equal to face value of the shares.
 If only reissued price is given and nothing else is written in question then
paid up amount equal to amount of face value called till forfeiture.
Case (b) Reissued at Premium

 It means reissue price is greater than paid up amount.
Bank a/c………Dr.
To Share Capital a/c
To Securities Premium a/c
(Being ……… shares reissued at ….., …….. paid up)
Case (c) Reissued at Discount

 It means reissue price is less than paid up amount.
Bank a/c…………..Dr.
Share forfeiture a/c…….Dr.
To Share Capital a/c
(Being ……… shares reissued at …….,………. Paid up)
 Amount of discount that company is offering at time of reissue is a loss for
the company and thus it should be written off from share forfeiture a/c.
 Maximum discount that a company can give per share at time of reissue is
equal to amount of F.V. forfeited per share at time of forfeiture.
 Reissue price per share cannot be less than amount unpaid (calls in arrears)
per share at time of forfeiture. This is the minimum amount that should be
received per share at time of reissue.
Minimum amt. of reissue = Paid up amount – Maximum discount
Maximum discount = Amt. of F.V. forfeited per share at time of forfeiture
Last journal entry

 After reissue if some amount is still left in share forfeiture account then it
should be transferred to capital reserve account because it is a capital gain
for the company.
Share forfeiture a/c…………Dr.
To Capital Reserve a/c
(Being gain on reissue transferred to capital reserve a/c)
Amount transferred to Capital Reserve account
55. A ltd. forfeited a share of ₹100 each issued at a premium of 20% for non-payment of
first call of ₹30 per share and final call of ₹10 per share. State the minimum price at which
shares can be reissued. [Sample Paper 2016]
56. Z ltd. forfeited 1000 shares of ₹10 each for non-payment of first call of ₹2 per share. The
final call of ₹3 per share was not yet made. Calculate the maximum amount of discount at
which these shares can be reissued. [AI 2017]
57. SSS ltd. forfeited 1000 equity shares of ₹100 each for the non-payment of first call ₹20
per share and second and final call of ₹25 per share. State:
(a) Can these shares be reissued?
(b) If yes, state the minimum amount at which these shares can be reissued.
(c) If these shares were reissued at ₹50 per share fully paid up, what will be the amount
credited to capital reserve account? [Delhi 2010, TS Grewal scanner 32]
58. Mohan limited forfeited equity shares of ₹10 each issued at a preium of ₹2 per share.
(a) 700 shares issued to X for non-payment of second and final call of ₹3 per share.
(b) 500 shares issued to Z for non-payment of first call of ₹2 per share and second and final
call of ₹3 per share.
The forfeited shares were reissued to Y for ₹11 per share fully paid. Pass journal entries
to record forfeiture and reissue of shares. [Delhi 2006 C] [TS Grewal Scanner 30]
59. Dinesh Ltd. invited applications for issuing 10,000 equity shares of ₹10 each. The amount
was payable as follows: On Application: ₹1, On Allotment ₹2, On First Call ₹3 and balance
amount on second and final call account.
The issue was fully subscribed. Ram to whom 100 shares was allotted, failed to pay the
allotment money and his shares were forfeited immediately after allotment. Shyam to
whom 150 shares were allotted, failed to pay the first call. His shares were forfeited after
the first call. Afterwards second and final call was made. Mohan to whom 50 shares were
allotted failed to pay second and final call. His shares were also forfeited. All the forfeited
shares were reissued at ₹9 per share fully paid up. Pass journal entries in books of Dinesh
Ltd. [AI 2011] [TS Grewal Scanner 34]
60. A company ltd. forfeited 200 shares of ₹20 each, ₹15 called up on which ₹10 per share
had been paid. Directors reissued all the forfeited shares to B @15 per share paid up for a
payment of ₹10 each. Give journal entries in books of the company for forfeiture and reissue
of shares. [AI 2014 C] [TS Grewal Scanner 38]
61. A ltd. forfeited 100 equity shares of the face value of ₹10 each, for the non-payment of
first call of ₹2 per share. ₹6 per share had already been called and paid. These shares were
subsequently reissued as fully paid up at the rate of ₹7 per share. Give journal entries in the
books of the company for forfeiture and reissue of shares.
62. X ltd. invited application for issuing 10,000 equity shares of ₹100 each at a premium of
₹100 per share. The amount was payable as follows:
On application and allotment – ₹100 per share (including ₹50 premium)
On first and final call – the balance
The issue was fully subscribed. A shareholder holding 500 shares paid the full share money
with application. Another shareholder holding 200 shares failed to pay the first and final
call money. His shares were forfeited. The forfeited shares were reissued for ₹19,000 as
fully paid up.
Pass journal entries for the above transactions in the books of the company.
63. Y Ltd. invited application for issuing 15,000 equity shares of ₹10 each on which ₹6 per
share were called up, which were payable as follows: ₹2 per share on application; ₹1 per
share on allotment and ₹3 per share on first call. The issue was fully subscribed and the
amount was received as follows:
On 10,000 shares – ₹6 per share
The directors forfeited those shares on which less than ₹6 per share were received. The
forfeited shares were reissued at ₹9 per share, as ₹6 per share paid up. Pass necessary
journal entries for the above transactions in books of company.
64. (a) Fill in the blank spaces in the journal entries given below:
Date Particulars L.F. Dr. amt. ₹ Cr. Amt. ₹

Share Capital a/c…….Dr. ………………
…………………………………. ………………
To share forfeiture a/c 3000
To share allotment a/c ………….
To share first call a/c …………..
(Being 1000 shares of ₹10 each, ₹8 called up,
issued at a premium of ₹2 per share
forfeited for non-payment of allotment
money of ₹5 per share including premium
and first call of ₹2 per share)
Bank a/c…………….Dr. 9800

To Share capital a/c ……………
To ………………………………. ……………
(Being 700 shares reissued at ₹14 per share
fully paid up)
Share forfeiture a/c …………….Dr. ……………..

To Capital reserve a/c …………….
(Being gain on reissue of forfeited shares
transferred to capital reserve a/c)
[TS Grewal Scanner 43]

(b) X ltd. forfeited 200 shares of ₹100 each, ₹70 called up, on which the shareholders 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. [Delhi 2013]
65. The directors of a company forfeited 200 shares of ₹10 each issued at a premium of ₹3
per share, for the non-payment of the first call money of ₹3 per share. The final call of ₹2
per share has not been made. Half of the forfeited shares were reissued at ₹1,000 fully paid
up. Pass journal entries for forfeiture and reissue of shares.
66. X ltd. forfeited 1,000 shares of ₹10 each (₹8 called up) for non-payment of the allotment
money of ₹5 per share including premium of ₹2 per share. Of these, 800 shares were
reissued to S at ₹7 per share as ₹8 called up.
Journalise the above transactions. [Delhi 2006]
67. Y Ltd. forfeited 1500 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 at ₹7 called up. Journalise the above transactions in books of Y ltd.
[AI 2006]
68. TAG Ltd. forfeited 400 shares of ₹10 each issued at a premium of ₹1 per share for non-
payment of allotment money of ₹4 per share (including premium). The first and final call of
₹3 per share has not been made yet. 50% of the forfeited share were reissued at ₹8 per
share fully paid up. Pass necessary journal entries for the forfeiture and reissue of shares.
69. L Ltd. forfeited 470 equity shares of ₹20 each issued at a premium of ₹3 per share for
the non-payment of allotment money of ₹8 (including premium ₹3) and the first call of ₹5
per share. Final call of ₹5 per share was not made. Out of these, 235 shares were reissued
at ₹19 each fully paid. Pass necessary journal entries for the above transactions in the books
of L Ltd. [Delhi 2014 C] [TS Grewal Scanner 37]
70. X Ltd. forfeited 900 equity shares of ₹100 each for non-payment of allotment money of
₹30 per share and the first call of ₹20 per share. The second and final call of ₹25 per share
has not been made. The forfeited shares were reissued for ₹90 per share, ₹75 paid up.
Journalise the above. [Foreign 2004] [TS Grewal 43]
71. Y ltd. forfeited 90 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
80 shares were reissued to Sanjay as ₹8 called up for ₹10 per share.
[Delhi 2013] [TS Grewal 53 (ii)]
72. JCV Ltd. forfeited 200 shares of ₹10 each issued at a premium of ₹2 per share for non-
payment of allotment money of ₹3 per share (including premium). The first and final call of
₹4 per share has not been made yet. 50% of the forfeited shares were reissued at ₹8 per
share as fully paid up. Pass necessary journal entries for forfeiture and reissue of shares.
[Delhi 2011 C] [TS Grewal 63]
73. VT Ltd. forfeited 200 shares of ₹10 each, issued at a premium of ₹5 per share, held by
Mohan for non-payment of the final call of ₹3 per share. 100 out of these shares were
reissued to Narendra at a discount of ₹4 per share. Journalise.
[Foreign 2003] [TS Grewal 61]
74. Vishesh Ltd. forfeited 1000 shares of ₹10 each issued at a premium of ₹2 per share for
non-payment of allotment money of ₹5 per share including premium. The final call of ₹2
per share was not yet called on these shares. Of the forfeited shares 800 shares were
reissued at ₹12 per share fully paid up. The remaining shares were reissued at ₹11 per share
fully paid up. [Delhi 2013 C] [TS Grewal 64]
75. Rolga Ltd. is having an authorized capital of ₹50,00,000 divided into equity shares of
₹100 each. The company offered 42,000 shares to the public. The amount payable was as
follows: On application ₹30 per share; On allotment ₹40 per share (including premium); On
first and final call ₹50 per share. Applications were received for 40,000 shares. All the sums
was duly received except the following:
Lal, a holder of 100 shares did not pay allotment and call money.
Pal, a holder of 200 shares did not pay call money.
The company forfeited the shares of Lal and Pal. Subsequently the forfeited shares were
reissued for ₹70 per share as fully paid up. Show the entries for the above transactions in
the Cash Book and Journal of the company. [Delhi 2015 C]
76. Gupta Ltd. invited applications for issuing 30,000 equity shares of ₹10 each at a premium
of ₹30 per share. The amount was payable as follows:
On Application ₹10 per share (including ₹8 premium)
On Allotment ₹12 per share (including ₹9 premium)
On first and final call – Balance
Applications for 27,000 shares were received. All the calls were made and were duly
received except on 3,000 shares held by Shiva who failed to pay the allotment and first call
money and on 2000 shares of Girdhar, who did not pay the first and final call. Shares of
Shiva and Girdhar were forfeited. Out of the forfeited shares, 4000 shares were reissued,
including all the shares of Girdhar at ₹17 per share as fully paid up.
Pass necessary journal entries in the books of Gupta ltd. for the above transactions.
[Foreign 2012]
77. Sukanya Ltd. invited applications for issuing 1,00,000 equity shares of ₹10 each. The
shares were reissued at a premium of ₹20 per share. The amount was payable as follows:
On Application and Allotment – ₹14 per share (including premium of ₹10)
On first call – ₹8 per share (including premium of ₹5)
On Final call – ₹8 per share (including premium of ₹5)
Applications for 96,000 shares were received. Rohit, a shareholder holding 7000 shares
failed to pay both the calls and Namit, a holder of 5000 shares did not pay the final call.
Shares of Rohit and Namit were forfeited. Of the forfeited shares, 8000 shares including all
the shares of Rohit were reissued to Reena at ₹8 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of Sukanya Ltd.
[AI 2016 C] [TS Grewal 73]
78. Software ltd. invited applications for issuing 70,000 equity shares of ₹10 each on which
₹7 per share were called up, which were payable as follows:
On Application – ₹2 per share
On Allotment - ₹3 per share
On First call – ₹ the balance
The amount was received as follows:
The directors forfeited 30,000 shares on which less than ₹7 per share were received. Later
on, the forfeited shares were reissued at ₹5 per share, as ₹7 per share paid up.
Pass necessary journal entries for the above transactions in the books of the company.
PRO-RATA ALLOTMENT, FORFEITURE AND REISSUE OF SHARES
79. Petromax Ltd. issued 50,000 shares of ₹10 each at a premium of ₹2 per share payable
as ₹3 on application, ₹5 on allotment (including premium) and balance in equal installments
over two calls. Applications were received for 92,000 shares and the allotment was done as
under:
Applicants of 40,000 shares – Allotted 30,000 shares
Applicants of 40,000 shares – Allotted 20,000 shares
Applicants of 12,000 shares – nil
Suresh, who had applied for 2,000 shares (category A) did not pay any money other than
application money.
Chander, who was allotted 800 shares (category B) paid the call money due along with
allotment. All other allottees paid their dues as per schedule.
Pass necessary journal entries in books of Petromax Ltd. to record the above.
[Delhi 2009] [AI 2009]
80. X ltd. issued 50,000 shares of ₹10 each at a premium of ₹2 per share payable as follows:
₹3 on application ; ₹6 on allotment (including premium) and ₹3 on final call.
Applications were received for 75,000 shares and a pro-rata allotment was made as follows:
To the applicants of 40,000 shares, 30,000 shares were reissued and for the rest applicants
, 20000 shares were issued. All money due was received except the allotment and call
money from Ram who had applied for 1200 shares (out of category A). All his shares were
forfeited. The forfeited shares were reissued for ₹7 per share fully paid up. Pass necessary
journal entries for the above transactions. [Delhi 2010] [TS Grewal Scanner 45]
81. Shakti Ltd. invited applications for issuing 1,00,000 equity shares of ₹10 each. The
amount was payable was as follows:
On Allotment - ₹2 per share
On First and final call – ₹5 per share
Applications were received for 2,20,000 shares. Applications for 20,000 shares were
rejected and their application money was refunded. Shares were allotted to the remaining
applicants as follows:
(a) Allotted 50% shares to Raman who had applied for 40,000 shares.
(b) To allot in full to Akbar who had applied for 20,000 shares.
(c) To allot balance of the shares on pro-rata basis to other applicants.
Excess application money was utilized in payment of allotment and final call. All calls were
made and were duly received except first and final call on 600 shares allotted to an applicant
in category (c). His shares were forfeited. The forfeited shares were reissued for ₹9 per
share fully paid up.
Pass necessary journal entries in the books of Shakti Ltd. for the above transactions.
82. Subham ltd. invited applications for issuing 12,000 equity shares of ₹10 each at a
premium of ₹3 per share. The amount was payable as under:
On Application and Allotment – ₹6 per share (including premium)
On First Call – ₹4 per share
On Second and Final Call – the balance
Applications for 18000 shares were received and pro-rata allotment was made to all the
applicants. Excess money received with applications was adjusted towards sums due on
first call. All calls were made and were duly received except the first call and second and
final call on 120 shares allotted to Vibhu. His shares were forfeited. The forfeited shares
were reissued at the maximum permissible discount as per provisions of the Companies
Act, 2013. Pass necessary journal entries for the above transactions in the books of the
company. [Delhi 2015] [TS Grewal Scanner 54]
83. Alfa Ltd. invited applications for issuing 75,000 equity shares of ₹10 each. The amount
was payable as follows:
On Application and allotment – ₹4 per share
On first call – ₹3 per share
On second and final call – balance
Applications for 1,00,000 shares were received. Shares were allotted to all the applicants
on pro-rata basis and excess money received with applications was transferred towards
sums due on first call. Vibha who was allotted 750 shares failed to pay the first call. Her
shares were forfeited. Afterwards the second call was made. The amount due on second
call was also received except on 1000 shares applied by Monika. Her shares were also
forfeited. All the forfeited shares were reissued to Mohit for ₹9000 as fully paid up.
Pass necessary journal entries in the books of Alfa Ltd. for the above transactions.
[Delhi 2015] [TS Grewal 74]
84. Radha Mohan Ltd. invited applications for issuing 4,00,000 equity shares of ₹50 each.
The amount was payable as follows:
On Allotment – ₹25 per share
On First and Final Call – ₹10 per share
Applications for 6,00,000 shares were received and pro-rata allotment was made to all the
applicants on the following basis:
Applicants for 4,00,000 shares were allotted 3,00,000 shares
Applicants for 2,00,000 shares were allotted 1,00,000 shares
It was decided that excess amount received on applications will be adjusted towards sums
due on allotment and surplus if any will be refunded. Vibhuti who was allotted 6000 shares
out of the group applying for 4,00,000 shares did not pay allotment money and his shares
were forfeited immediately. Afterwards these shares were reissued at ₹30 per share fully
paid up. Later on, first and final call was made. Shahid, who had applied for 2000 shares out
of the group applying for 2,00,000 shares failed to pay first and final call and his shares were
also forfeited. These shares were afterwards reissued at ₹60 per share fully paid up.
Pass necessary journal entries in the books of Radha Mohan Ltd. for the above transactions.
[AI 2016 C]
85. Dogra Ltd. had an authorized capital of ₹1,00,00,000 divided into equity shares of ₹100
each. The Company offered 84,000 shares to the public at premium.
The amount was payable as follows:
On Allotment – ₹40 per share (including premium)
On First and Final Call – ₹50 per share
Applications were received for 80,000 shares.
All sums were duly received except the following:
Lakhan, a holder of 200 shares did not pay allotment and call money.
Paras, a holder of 400 shares did not pay call money.
The company forfeited the shares of Lakhan and Paras. Subsequently the forfeited shares
were reissued for 80 per share as fully paid up. Show the entries for the above transactions
in the cash book and journal of the company. [AI 2015 C] [TS Grewal 77]
86. Raja Ltd. invited applications for issuing for 50,000 equity shares of ₹10 each. The
amount was payable as follows:
On Allotment – ₹5 per share
On First and Final Call – Balance
Applications for 70,000 shares were received. Allotment was made to all the applicants on
pro-rata basis. Excess application money received on application was adjusted towards
sums due on allotment. Ramesh who had applied for 700 shares, did not pay the allotment
money and on his failure to pay allotment money his shares were forfeited. Afterwards, the
first and final call was made. Adhar, who had been allotted 500 shares, did not pay the first
and final call. His shares were also forfeited. Out of the forfeited shares 900 shares were
reissued at ₹8 per share as fully paid up. The reissued shares included all the shares of
Ramesh.
Pass necessary journal entries for the above transactions in the books of the company.
[Delhi 2013 C] [TS Grewal 81]
87. VXN Ltd. invited applications for issuing 50,000 equity shares of ₹10 each at a premium
of ₹8 per share. The amount was payable as follows:
On Application: ₹4 per share (including ₹2 premium)
On Allotment: ₹6 per share (including ₹3 premium)
On First Call: ₹5 per share (including ₹1 premium)
On second and final call: Balance amount
The issue was fully subscribed. Gopal, a shareholder holding 200 shares did not pay the
allotment money and Madhav, a shareholder holding 400 shares paid his entire share
money along with allotment money. Gopal’s shares were immediately forfeited after
allotment. Afterwards first call was made. Krishan a holder of 100 shares failed to pay first
call money and Girdhar a holder of 300 shares paid the second call money will first call.
Krishan’s share were forfeited immediately after first call. Second and final call was made
afterwards and was duly received. All the forfeited shares were reissued at ₹9 per share
fully paid up.
Pass necessary journal entries in books of the company for the above transactions.
[AI 2017] [TS Grewal 72]
88. JJK Ltd. invited applications for issuing 50,000 equity shares of ₹10 each at par. The
amount was payable as follows:
On Application: ₹2 per share
On Allotment: ₹4 per share
On first and final call: balance amount
The issue was oversubscribed three times. Applications for 30% shares were rejected and
money refunded. Allotment was made to remaining applicants as follows:
Category No. applied No. allotted
(1) 80,000 40,000
(2) 25,000 10,000
Excess money paid by the applicants who were allotted shares were adjusted towards sums
due on allotment.
Deepak, a shareholder belonging to category (1), who had applied for 1000 shares failed to
pay allotment money. Raju, a shareholder holding 100 shares also failed to pay allotment
money. Raju belonged to category (2). Shares of both Deepak and Raju were forfeited after
allotment. Afterwards first and final call was made and it was duly received. The forfeited
shares of Deepak and Raju were reissued at ₹11 per share fully paid up.
Pass necessary journal entries in books of the company. [AI 2017] [TS Grewal 79]
89. Bayson ltd. invited applications for issuing 54,000 shares of ₹100 each payable as
follows: ₹50 on application; ₹10 on allotment and balance on first and final call.
Applications were received for 80,000 shares. Full allotment was made to
the applicants of 14,000 shares. The remaining applicants were allotted 40,000 shares on
pro-rata basis. Excess money received with applications was adjusted towards sums due on
allotment and call.
Vibhor, holding 1200 shares, who belonged to the category of applicants
to whom full allotment was made, paid the call money at the time of allotment. Vidur, who
belonged to the category of applicants to whom shares were allotted on pro-rata basis dis
not pay anything after application on his 400 shares. Vidur’s shares were forfeited after the
first and final call. All the forfeited shares were later on reissued at ₹110 per share as fully
paid up. Pass the necessary journal entries in the books of Bayson Ltd. for the above
transactions by opening Calls in Arrears and Calls in Advance account whenever necessary.
[AI 2017C] [TS Grewal Scanner 62]
90. Sajag Ltd. has an authorized capital of ₹30,00,000 divided into equity shares of ₹30 each.
The company invited applications for issuing 70,000 shares.
Applications for 68,000 shares were received.
All calls were made and were duly received except the final call of ₹10 per share on 5000
shares.
Case (a) Shares are not forfeited
Case (b) Shares are forfeited.
(a) Present Share Capital in the Balance Sheet of the company as per Schedule III of
(b) Also prepare Notes to Account for the same. [AI 2016 C] [TS Grewal Scanner 24]
91. On 1st April 2012, Kamya Ltd. was formed with an authorized capital of ₹40,00,000
divided into 4,00,000 equity shares of ₹10 each. The company issued prospectus inviting
applications for 3,80,000 equity shares. The company received applications for 3,60,000
shares. During the first year, ₹8 per share were called. Deepti holding 3000 shares and Divya
holding 6000 did not pay the first call of ₹2 per share. Divya’s share were forfeited after the
first call and later on 5000 shares were reissued at ₹6 per share, ₹8 called up.
Show the following:
(a) Share Capital in the Balance sheet of the company as per Schedule III, Part I of
(b) Also prepare Notes to Accounts. [Foreign 2014] [TS Grewal Scanner 21]
92. BBG Ltd. had issued 1,00,000 equity shares of ₹10 each at a premium of ₹3 per share
payable with application money. While passing the journal entries related to the issue,
some blanks are left. You are required to complete these blanks.
In the books of BBG LTD.
JOURNAL
Date Particulars L.F. Dr. (₹) Cr. (₹)
2015
Jan 5 …………………. Dr. ……………….
To ………………………….. ………………..
(Applications money received for 1,40,000
shares @₹6 per share including premium)
Jan 17 Equity share application a/c…….Dr. …………………

To ………………………………. ……………….
To ………………………………. ……………….
To ……………………………… ………………..
To …………………………………. ………………..
(Application money transferred to share capital
account, securities premium account, refunded
for 20,000 shares for rejected applications and
balance adjusted towards money due on
allotment as shares were allotted on pro-rata
basis)
Jan 17 ……………………………… Dr. ………..........

To ………………………………. ………………..
(Being allotment money due @4 per share)
Feb 20 ………..........................Dr. …………………
To …………………………….. …………………
(Being allotment money received)
April 1 ……………………………….. Dr. ……………….

To ……………………………….. ………………..
(Being first and final call due)
April 2 ………………
……………………………….Dr.
3000
Calls in arrears a/c…….Dr.
……………….
To …………………………..
(Being first and final call money received)
May 20 …………………………………Dr. ……………….

To …………………………………. ………………..
To ………………………………….. ………………..
(Being shares forfeited on which first call was
not received)
………………………………….Dr.
June 5 …………………
………………………………….Dr.
3000
To ……………………………….
…………………
(Forfeited shares reissued)
June 5
…………………………………Dr. …………………
To ……………………………. ………………..
(…………………………………………………………..
…………………………………………………………)
93. Akash Ltd. is registered with an authorized share capital of ₹8,00,000 divided into equity
shares of ₹10 each. Subscribed and fully paid up share capital of the company was
₹4,00,00,000. For providing employment to the local youth and for the development of the
rural areas of Jammu and Kashmir State, the company decided to set up a food processing
unit in Anantnag district. The company also decided to open skill development centres in
Ladakh, Srinagar and Punch. To meet its financial requirements, the company decided to
issue 1,00,000 equity shares of ₹10 each and 10,000; 9% debentures of ₹100 each. The
debentures were redeemable after five years. The issue of equity shares and debentures
was fully subscribed. A shareholder holding 1000 shares failed to pay the final call of ₹2 per
share.
Present the share capital in the Balance Sheet of the company as per the provisions
of Schedule III of the Companies Act, 2013. Also identify two values that company wishes
to communicate. [Delhi 2017] [TS Grewal Scanner 16]

Accounting For Share Capital

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Accounting For Share Capital

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ACCOUNTING FOR SHARE CAPITAL

SHARE CAPITAL OF A COMPANY

CLASSIFICATION OF SHARES (FROM ACCOUNTING POINT OF VIEW)

(C) SUBSCRIBED SHARE CAPITAL

QUESTIONS TO BE DONE IN CLASS

ISSUE OF SHARES FOR CASH

(B) ISSUE OF SHARES AT PREMIUM

SECTION 52 (2) OF COMPANIES ACT 2013

DISCLOSURE IN BALANCE SHEET

 If the question is silent, it is assumed that amount of securities premium

ISSUE OF SHARES FOR CONSIDERATION OTHER THAN CASH

(a) Reject excess application

(b) Pro-Rata Allotment

CALCULATION OF AMOUNT RECEIVED ON ALLOTMENT

Case (a) Reissued at Par

RULE FOR PAID UP AMOUNT (CALLED UP AMOUNT)

Case (b) Reissued at Premium

Case (c) Reissued at Discount

Last journal entry

Date Particulars L.F. Dr. amt. ₹ Cr. Amt. ₹

Bank a/c…………….Dr. 9800

Share forfeiture a/c …………….Dr. ……………..

[TS Grewal Scanner 43]

Jan 17 Equity share application a/c…….Dr. …………………

Jan 17 ……………………………… Dr. ………..........

April 1 ……………………………….. Dr. ……………….

May 20 …………………………………Dr. ……………….

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