Journal Entries for Issue of Shares

Q. Gopal Ltd. was registered with an authorised capital of ₹ 50, 00, 000 divided into Equity Shares of ₹ 100 each . The company offered for public subscription all the shares . Public applied for 45, 000 shares and allotment was made to all the applicants. All the calls were made and were duly received except the final call of ₹ 20 per share on 500 shares.
Prepare the Balance Sheet of the company showing the different types of share capital.

Q.

On April 1, 2018, a Limited Company was incorporated with an authorised capital of Rs 8, 00, 000 divided into shares of Rs 10 each.

It offered to the public for subscription of 60, 000 shares payable as follows:

$\begin{array}{ccc}\text{On Application}& & \text{Rs 3 per share}\\ \text{On Application (May 1, 2018)}& & \text{Rs 2 per share}\\ \text{On First and Final Call (One month after allotment)}& & \text{Rs 5 per share}\end{array}$

Public applied for 92, 000 shares and the application money was duly received on April 15, 2018.Applications for 2, 000 shares were rejected and applicants for 90, 000 shares were allotted 60, 000 shares.

Give journal entries to record the transactions in the books of the company if:

(i) The amount due has been duly received.

(ii) The company maintains the combined account for application and allotment.

Q. The authorised capital of ₹ 16, 00, 000 of XYZ Ltd. is divide into 1, 60, 000 Equity Shares of ₹ 10 each. Out of these shares , 80, 000 Equity Shares were issued at par to public for subscription . The full nominal value is payable on application . All the shares were subscribed by the public and total amount was paid for . Pass necessary journal entries in the books of the company .

Q.

Rupak Ltd. issued 10, 000 shares of Rs 100 each payable Rs 20 per share on application, Rs 30 per share on allotment and balance in two calls of Rs 25 per share. The application and allotment money were duly received. On first call all member pays their dues except one member holding 200 shares, while another member holding 500 shares paid for the balance due in full. Final call was not made.

Give journal entries and prepare cash book.

Q.

Eastern Company Limited issued 40, 000 shares of Rs. 10 each to the public for the subscription out of its share capital, payable as Rs. 4 on application, Rs. 3 on allotment and the balance on first and final call. Applications were received for 40, 000 shares. The company made the allotment to the applicants in full. All the amounts due on allotment and first and final call were duly received. With how much amount shall the share capital be credited on first and final call?

1. None of these

2. Rs 1, 60, 000

3. Rs 1, 20, 000

4. Rs 2, 00, 000

Q.

Share application money is ulimately transferred to ___

1. Share application account

2. Share capital account

3. Bank account

4. None of the above

Q. A limited 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 entries in company's journal

Q.

On receipt of application money, which account is credited ?

1. Share application account

2. Bank account

3. Share capital account

4. None of the above

Q.

On receipt of application money, which account is debited ?

1. None of the above

2. Share application account

3. Share capital account

4. Bank account

Q.

Which account is debited on receipt of the share calls money ?

1. None of these

2. Share calls account

3. Bank account

4. Share capital account

Q.

Mona Earth Mover Limited decided to issue 12, 000 shares of Rs.100 each payable at Rs.30 on application, Rs.40 on allotment, Rs.20 on first call and balance on second and final call. How much amount shall be debited to bank account if only 11, 955 shareholders paid the the money due on first call ?

1. Rs 239100

2. Rs 240000

3. Rs 293100

4. None of the above

Q. Write the process of preparing ledger from a journal.

Q.

Which account is credited on receipt of the share call money ?

1. Share Allotment Account

2. Share Calls Account

3. Share Capital Account

4. Bank Account

Q. The portion of the subscribed capital that has not been paid by shareholders is known as __________.

[0.88 marks]

1. reserve capital
2. capital reserve
3. uncalled capital
4. unpaid capital

Q. Select the most appropriate alternative from those given below and rewrite the sentence.
Transactions related to Cash and Bank A/c are entered in _________ voucher.

1. Purchases
2. Sales
3. Contra
4. Payment

Q. Total of Bills Payable Book is posted to the ledger ___________.

1. on the debit side of bills payable A/c
2. Either (a) or (b)
3. None of the above
4. on the credit side of bills payable A/c

Q. Ravi Ltd. issued 50, 000 shares of ₹10 each payable as ₹2 on application, ₹3 on allotment, ₹2.5 on first call, and ₹2.5 on the second and final call. All the amount was duly received except for the second and final call on 800 shares. These shares were forfeited. Out of these, 600 shares were re-issued as fully paid up in such a way that ₹2, 100 were transferred to the capital reserve.
Pass the journal entry for forfeiture of shares:

[2 marks]

1. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit (₹)}& \text{Credit (₹)}\\ & & & & & \\ & \text{Share Capital A/c}& \text{Dr.}& & \text{2, 000}& \\ & \text{To Share Forfeiture A/c}& & & & \text{2, 000}\\ & & & & & \end{array}$$
2. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit (₹)}& \text{Credit (₹)}\\ & & & & & \\ & \text{Share ForfeitureA/c}& \text{Dr.}& & \text{2, 000}& \\ & \text{To Share Capital A/c}& & & & \text{2, 000}\\ & & & & & \end{array}$$
3. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit (₹)}& \text{Credit (₹)}\\ & & & & & \\ & \text{Share Capital A/c}& \text{Dr.}& & \text{8, 000}& \\ & \text{To Share Forfeiture A/c}& & & & \text{6, 000}\\ & \text{To Calls-in-arrears A/c}& & & & \text{2, 000}\\ & & & & & \end{array}$$
4. $$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit (₹)}& \text{Credit (₹)}\\ & & & & & \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & \text{6, 000}& \\ & \text{Calls-in-arrears A/c}& \text{Dr.}& & \text{2, 000}& \\ & \text{To Share Capital A/c}& & & & \text{8, 000}\\ & & & & & \end{array}$$

Q. How do you treat the share capital account at the time of the allotment of shares?

1. Debited
2. Credited

Q.

PRACTICAL PROBLEMS

(Over subscription- Some over application refunded and rest used for allotment)

ONGC Ltd. invited applications for 25, 000 shares of Rs 100 each payable as under-

On Application Rs 20		On Allotment	Rs 40
On First Call Rs 25, and		On Final Call	Rs 15

Public applied for 40, 000 shares, out of which 10, 000 shares were rejected and money on 5, 000 shares was diverted to share allotment. All the allotment and calls money was received.
Pass journal entries in the journal of ONGC Ltd.

Q. Entry in debit side of bank pass book implies ____________.

1. Business Receipts
2. Personal Receipts
3. Cash withdrawn
4. Cash/ cheque deposited in Bank

Q. The margin of safety may be defined as:

1. The extent to which sales revenue exceeds fixed costs.
2. The point at which break-even point sales are achieved.
3. The excess of planned sales over the current actual sales.
4. The difference between planned sales and break even point sales.

Q. When a cheque received is endorsed, it must be entered on _____________.

1. Debit side of the cash book only
2. Both sides of the cash book
3. No where
4. Credit side of the cash book only

Q. The first step in preparation of Receipt and Payment Account is taking the opening balances of cash on hand and cash at bank and entering them on the _______ side; bank overdraft at the beginning of the year by entering the same on the ______ side of this account.

1. credit, debit
2. debit, credit
3. debit, debit
4. credit, credit

Q. A company decided to issue 7, 50, 000 equity shares of Rs 10 each at Rs 5 premium. The whole amount was payable on application. Applications for 20, 00, 000 shares were received among which those for 50, 000 were rejected and shares were allotted to the remaining applicants on pro rata basis. Pass necessary journal entries.

Q. Ravi Ltd. issued 50, 000 shares of ₹10 each payable as ₹2 on application, ₹3 on allotment, ₹2.5 on first call, and ₹2.5 on the second and final call. All the amount was duly received except for the second and final call on 800 shares. These shares were forfeited. Out of these, 600 shares were re-issued as fully paid up in such a way that ₹2, 100 were transferred to the capital reserve.
Calculate the amount of calls in arrears:

[2 marks]

1. ₹1, 600
2. ₹2, 000
3. ₹800
4. ₹8, 000

Q. X ltd issued 20000 shares of rs. 100 each at a premium of 6%. payments were made as rs. 25 on application 46 on allotment 10 on first call and 25 on second final call. The apps were received for 18000 shares and all accepted. All the money duly received except the first and final call on 100 shares . pass journal entries without opening calls in arrear account.

Q. How do you treat the share application account at the time of the receipt of application money from the shareholders?

1. Debited
2. Credited

Q. How do you treat the bank account at the time of the receipt of application money from the shareholders?

1. Credited
2. Debited

Q. A & B entered into a joint venture to purchase and sell crackers. Profits or losses were to be shared equally. A purchased cracker worth Rs.1, 00, 000 and incurred the following expenses in sending it to B: Forwarding charges Rs.6, 000, Insurance charges Rs.5, 000 and Rental Charges Rs.4, 000. The whole crackers were disposed of by B for Rs.2, 20, 000. B incurred advertisement expenses Rs.20, 000. What will be the profit on joint venture?

1. Rs.2, 20, 000
2. Rs.1, 20, 000
3. Rs.85, 000
4. Rs.1, 00, 000

Q. __________ is an consideration received in exchange of money or money's worth.

1. Expenditure
2. Income
3. Liability
4. Asset