Issue of Shares at Discount

Q.

Under which head and how are the following items shown in the Balance Sheet of a company under Schedule III:

(i) Calls-in-Arrears; (ii) Share Application Money Pending Allotment; (iii) Unpaid Dividend; and (iv) Dividend not paid on Cumulative Preference Shares?

Q.

Rita, Geeta and Ashish were partners in a firm sharing profits/ losses in the ratio 3 : 2 : 1. On March 31, 2012 their balance sheet was as follows.

$$\begin{array}{cccccc}\text{Capital and Liabilities}& & \text{Amt.}& \text{Assets}& & \text{Amt.}\\ \text{Capitals:}& & & \text{Cash}& & 22,500\\ \text{Rita}& 80,000& & \text{Debtors}& & 52,300\\ \text{Geeta}& 50,000& & \text{Stock}& & 36,000\\ \text{Ashish}& \underset{–}{30,000}& 1,60,000& \text{Investments}& & 69,000\\ \text{Creditors}& & 65,000& \text{Plant}& & 91,200\\ \text{Bills Payable}& & 26,000& & & \\ \text{General Reserve}& & 20,000& & & \\ & & \underset{–}{}& & & \underset{–}{}\\ & & \underset{–}{2,71,000}& & & \underset{–}{2,71,000}\end{array}$$

On the above mentioned date the firm was dissolved.

1. Rita was appointed to realise the assets. Rita was to receive 5% commission on the rate of assets (except cash) and was to bear all expenses of realisation.

2. Assets were realised as follows:
Debtors Rs. 30, 000
Stock Rs. 26, 000
Plant Rs. 42, 750

3. Investments were realised at 85% of the book value.

4. Expenses of realisation amounted to Rs. 4, 100 .

5. Firm had to pay Rs. 7, 200 for outstanding salary not provided for earlier.

6. Contingent liability in respect of bills discounted with the bank was also materialised and paid off Rs. 9, 800.

Prepare realisation account, capital accounts of partners and cash account.

Q.

What are the uses of securities premium?

Q.

When the shares are issued at a price less than the face value of the share, it is known as shares issued at___

1. Discount

2. Premium

3. None of the above

4. Interest

Q. Explain the process of preparing income statement and balance sheet.

Q.

Q. The shares of a company are said to be issued at when their issue price is less than its nominal value.

1. par
2. a premium
3. a discount
4. interest

Q.

Describe the purposes for which a company can use ‘Securities Premium Account’.

Q. Match List-I(Items) with List-II(Headings) and select the correct answer using the codes given the lists.

List-I(Items)	List-II(Headings)
I. Provision for income tax	(a) Miscellaneous expenses not written off
II. Share premium	(b) Current liabilities
III. Unclaimed dividend	(c) Reserves and surplus
IV. Discount issue of shares	(d) Profit and loss account

1. I-(b), II-(c), III-(d), IV-(a)
2. I-(d), II-(c), III-(b), IV-(a)
3. I-(d), II-(a), III-(b), IV-(c)
4. I-(a), II-(b), III-(c), IV-(d)

Q. As per Section 52 of the Companies Act 2013, the securities premium reserve can be utilised for the purpose of:

1. Redemption of preference shares
2. Transfer of amount to capital redemption reserve
3. Payment of dividend on preference shares
4. Payment of premium on redemption of preference shares.

Q. For purchase of plant from Joint Bank Account, in case separate sets of books are maintained for joint venture, the journal entry will be _______________.

1. Plant A/c debited and Joint Bank A/c credited.
2. Plant A/c debited and Venturers Capital A/c credited.
3. Joint Venture A/c debited and Plant A/c credited.
4. Joint Venture A/c debited and Joint Bank A/c credited.

Q. When the shares of a company are issued more than its nominal value (face value), the excess amount is called .

1. dividend
2. premium
3. discount
4. interest

Q. The premium, if any is payable on redemption that must be provided for out of _________.

1. securities premium or any profits
2. divisible profits only
3. securities premium only
4. securities premium or divisible profits

Q. The shares of a company are said to be issued at when their issue price is equal to their nominal value.

1. par
2. a premium
3. a discount
4. interest

Q. If during the accounting period the assets increased by Rs 7, 000, and the owner's equity decreased by Rs 3, 000, then the liabilities must have ________.

1. increased by Rs 10, 000
2. increased by Rs 4, 000
3. decreased by Rs 4, 000
4. decreased by Rs 10, 000

Q. Shares can be issued at __________.

1. Premium
2. Discount
3. Any of the above three
4. Par

Q. According to Section 78 of the companies Act, the amount in the Securities Premium A/c cannot be used for the purpose of __________.

1. Issues of fully paid bonus shares
2. Writing off losses of the company
3. Writing of preliminary expenses
4. Writing off commission or discount on issues of shares

Q. Goods worth Rs.45, 000 purchased from Lalit on credit will be recorded in_______.

1. Cash book
2. Purchase journal
3. Journal book
4. Stock register

Q. When shares are issued at a premium for the purpose of redemption of preference shares, amount of premium can be used for redemption of par value of preference shares.

1. True
2. False

Q.

Jyoti Ltd makes an issue of 50, 000 equity shares of Rs 10 each at a premium of Rs 2 per share, payable as follows : On application Rs 4 per share; On allotment Rs 6 per share( including premium); On First & Final Call Rs 2 per share.

Allotment money has bot been received on 100 shares and call have not been received on 200 shares respectively. The company forfeited these 200 shares and reissued at a discount of 10% as fully paid.

Give necessarey journal entries of the above transactions in the books of the company.

Q. For purchase of plant from Joint Bank A/c. in case separate sets of books are maintained, the correct journal entry will be _____________________.

1. Joint Venture A/c will be debited and Joint Bank A/c will be credited
2. Plant A/c will be debited and Joint Bank A/c will be credited
3. Plant A/c will be debited and Ventures Capital A/c will be credited
4. Joint Venture A/c will be debited and Plant A/c will be credited

Q. Objective Type Question :
Answer in one Sentence only :

What is meant by share premium?

Q. Objective Type Question :
Answer in one Sentence only :

Define securities premium.

Q.

What are the uses of securities premium?

Q. Gross profit is equal to _______________.

1. Net profit minus expenses
2. Purchases plus stock minus net sales
3. Net sales plus selling price of stock minus purchases
4. Net sales minus cost price of sales