1. Batliboi Co. Ltd., issued 50,000 equity shares of Rs.

10 each to the
public on condition that full amount of shares will be paid in a lump sum.
All these shares were taken up and paid by the public. Pass journal entries
in the books of company when
(a)Shares are issued at par.
(b)Shares are issued at a premium of 10% and
(c) Shares are issued at a discount of 10%.

SOLU BOOKS OF BATIBOI CO. LTD

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
A Bank A/c Dr. 5,00,000
To. Equity Share Capital A/c 5,00,000
(Being 50,000 shares issued at Rs.10 each)

B Bank A/c Dr. 5,50,000

To. Equity share capital A/c (50,000X10) 5,00,000
To. Securities Premium A/c (50,000X1) 50,000
(Being 50,000 shares of Rs.10 each issued at a premium of Re.1 each)

C Bank A/c Dr. 4,50,000

Discount on issue of shares A/c (50,000X1) Dr. 50,000
To. Equity share capital A/c (50,000X10) 5,00,000
(Being 50,000 shares of Rs.10 each issued at a discount of Re.1 per
share)

2. Ram Ltd. purchased assets of Rs.8,00,000 from Anil Bros. It issued

equity shares of Rs.100 each fully paid up in satisfaction of their claim.
Make journal entries to record these transactions.

SOLU RAM LTD.

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Assets A/c Dr 8,00,000
To. Anil Bros. A/c 8,00,000
(Being assets purchased from Anil Bros.)

Anil Bros. A/c Dr 8,00,000

To. Equity Share Capital A/c 8,00,000
(Being issue of 8,000 shares of Rs.100 each fully paid up)
 3. Kailash Ltd. Purchased the business of Main Bros. for Rs. 54,00,000
payable in fully paid shares of Rs.100 each. What entries will be made in
the books of kailash Ltd.,
If such issue is;
(a) At par
(b) At a premium of 20% and
(c) At a discount of 10%?

SOLU KAILASH LTD.

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Sundry Assets A/c Dr. 54,00,000
To. Mani Bros. A/c 54,00,000
(Being purchase of business)

Mani Bros. A/c Dr. 54,00,000

To. Share Capital A/c 54,00,000
(Being issue of fully paid shares of Rs.100 each)

Mani Bros. A/c Dr. 54,00,000

To. Share Capital A/c (45,000X100) 45,00,000
To. Securities Premium A/c (45,000X20)
9,00,000
(Being issue of 45,000 fully paid shares of Rs.100 each at a
premium of 20%)
Mani Bros. A/c (60,000X90) Dr. 54,00,000
Discount on Issue of Shares A/c(60,000X10) Dr.
6,00,000
To. Share Capital A/c (60,000X100)
60,00,000
(Issue of 60,000 fully paid shares of Rs.100 each at a discount
of 10%)

WORKING NOTES:
1. When shares are issued at a premium of 20%

No. of shares to be issued= Purchase Price = Rs.54,00,000 = 45,000 Shares

Issue Price 120

2. When shares are issued at a discount of 10%

No. of shares to be issued= Purchase Price = Rs.54,00,000 = 60,000 Shares

Issue Price 90
4. Walter Ltd. Purchased Land & Buildings costing Rs. 20,00,000 and in payment allotted
20,000 equity shares of Rs. 100 each as fully paid. Further the company issued 40,000 equity
shares to the public. The shares are payable as follows:
 On application Rs. 20; On allotment Rs. 40; On call Rs. 40.
The public applied for all shares which were allotted. All moneys were received.
Give journal entries and the balance sheet of the company.

SOLU WALTER LTD.

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Land & Buildings A/c Dr. 20,00,000
To Equity Share Capital A/c 20,00,000
(Being Land & Building purchased and in return 20,000 equity shares of Rs.100
each allotted to the vendor)

Bank A/c Dr. 8,00,000

To Equity Share Application A/c 8,00,000
(Being equity share application money received on 40,000 shares at Rs.20 each)

Equity Share Application A/c Dr. 8,00,000

To Equity Share Capital 8,00,000
(Being equity share application money transferred to equity share capital A/c)

Equity Share Allotment A/c Dr. 16,00,000

To Equity Share Capital A/c 16,00,000
(Being equity share allotment due on 40,000 shares of Rs.40 per share as per the
resolution of the board of Directors)

Bank A/c Dr. 16,00,000

To Equity Share Allotment A/c 16,00,000
(Being equity share allotment money received on 40,000 shares at Rs.40 per
share)

Equity Share Call A/c Dr. 16,00,000

To Equity Share Capital A/c 16,00,000
(Being equity share call due on 40,000 shares of Rs.40 per share as per the
resolution of the board of directors)

Bank A/c Dr. 16,00,000

To Equity Share Call A/c 16,00,000
(Being equity share call money received on 40,000 shares at Rs.40 per share)

NOTES
1. SHARE CAPITAL:
Issued and paid up capital 60,000 shares of Rs.100 each Rs.60,00,000
TANGIBLE ASSETS:
Land and Building Rs.20,00,000

BALANCE SHEET OF WALTER LTD. AS ON 31ST DEC….

PARTICULARS AMOUNT AMOUNT
I. EQUITY AND LIABILITIES:
(i) Share holder’s funds:
Share Capital 60,00,000
(ii) Non-current liabilities
----
(iii) Current liabilities ----
 ________
Total (i) + (ii) + (iii) 60,00,000

II. ASSETS:
(i) Non-current assets:
Fixed assets:
Tangible assets 20,00,000
(ii) Current assets:
Cash at bank (8,00,000 + 16,00,000 + 16,00,000) 40,00,000
Total (i) + (ii) 60,00,000

H.W.
5. Good Luck Ltd. invited applications for 20,000 shares of the value of Rs. 20 each. The
amount payable is Rs. 5 on application, Rs. 8 on allotment and the balance when required. The
whole of the above issue was applied for and cash was duly received. Give the journal entries
for the above transaction.

6. MTL Ltd. invited applications for 20,000 shares of Rs. 100 each payable:
Rs. 25 on application
Rs. 35 on allotment
Rs. 40 on call
25,000 shares were applied for. The directors accepted applications for 20,000 shares and
rejected the remaining applications. All moneys due were fully received. Give journal entries
and show the balance sheet of the company.

SOLU MTL LTD.

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Bank A/c Dr. 6,25,000
To Share Application A/c 6,25,000
(Being application money received on 25,000 shares at Rs.25 per share)

Share Application A/c Dr. 5,00,000

To Share Capital A/c 5,00,000
(Being allotment of 20,000 shares and their application money transferred to share
capital A/c)

Share Application A/c Dr. 1,25,000

To Bank A/c 1,25,000
(Being application money on 5,000 shares refunded)

Bank A/c Dr. 7,00,000

To Share Allotment A/c 7,00,000
(Being amount received on allotment)

Share Allotment A/c Dr. 7,00,000

To Share Capital A/c 7,00,000
(Being amount due on 20,000 shares at Rs.35 per share)

Bank A/c Dr. 8,00,000

To Share Call A/c 8,00,000
(Being call money received)

Share Call A/c Dr. 8,00,000

 To Share Capital A/c 8,00,000
(Being call money due on 20,000 shares at Rs.40 per share)

BALANCE SHEET OF MTL LTD. AS ON 31ST DEC.

PARTICULARS AMOUNT AMOUNT
I. EQUITY AND LIABILITIES:
(i) Share holder’s funds:
Share Capital (20,000X25) + (20,000X35) + (20,000X40) 20,00,000

(ii) Non-current liabilities

----
(iii) Current liabilities ----
________
Total (i) + (ii) + (iii) 20,00,000

II. ASSETS:
(i) Non-current assets:
Fixed assets: ----

(ii) Current assets:

Cash at bank (5,00,000+7,00,000+8,00,000) 20,00,000
Total (i) + (ii) 20,00,000

7. Nalli & Co.Ltd was registered with an authorized capital of Rs.20,00,000 divided into 20,000
shares of Rs.100 each. The company offered 12,000 shares to the public which were payable:
Rs.20 per share on application,Rs.40per share on allotment and Rs.40 on call.

Applications for 18,000 shares were received on which the directors decided as follows:
Applicants for 10,000 shares - full
Applicants for 5,000 shares - 2,000 shares
Applicants for 3,000 shares - Nil
The excess application money was adjusted towards allotment. All the money due on allotment
and call was fully received. Make the necessary entries in the company’s books.

SOLU NALLI & CO. LTD.

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Bank A/c Dr. 3,60,000
To Share Application A/c 3,60,000
(Being application money received for 18,000 shares at Rs.20 per share)

Share Application A/c Dr. 2,40,000

To Share Capital A/c 2,40,000
(Being application money on 12,000 shares transferred to share capital A/c)

Share Application A/c Dr. 60,000

To Bank A/c 60,000
(Being application money on 3,000 shares refunded)

Share Application A/c Dr. 60,000

To Share Allotment A/c 60,000
 (Being the surplus application money on 3,000 shares)

Share Allotment A/c Dr. 4,80,000

To Share Capital A/c 4,80,000
(Being the allotment amount due on 12,000 shares at Rs.40 per share)

Bank A/c Dr. 4,20,000

To Share Allotment A/c(4,80,000-60,000) 4,20,000
(Being the amount received on allotment)

Bank A/c Dr. 4,80,000

To Share Call A/c 4,80,000
(Being the call money received)

Share Call A/c Dr. 4,80,000

To Share Capital A/c 4,80,000
(Being the call amount due on 12,000 shares at Rs.40 per share)

8. James& Co., Ltd. offered 25,000 shares of Rs. 10 each to the public on the following terms:
Rs. 2.50 to be paid on application:
Rs. 3.00 to be paid on allotment
Rs. 2.00 to be paid two months after allotment and
Rs. 2.50 to be paid three months after the first call.
The public applied for 22,000 shares which were allotted, the allotment taking place on 1 st
April 1998.all money due on allotment was received by 15th May 1998. Calls were duly made
but a shareholder holding 500 shares failed to pay the calls. Make entries in the cash book and
the journal. Also prepare ledger accounts and balance sheet.

9. X Co.Ltd issued 4,000 shares of Rs.10 each at premium of Rs.2 per share. The amount was
payable as under:
On application Rs.3 per share
On allotment Rs.4 per share (including premium)
On first call Rs.3 per share
On second Rs.2 per share
The company received application for 5,000 shares and the allotment was made as under:
(i) Applicants for 200 share- Nil
(ii) Applicants for 800 shares- Full
(iii) Applicants 4,000 share-3,200 share
All most were duly received except the first call on 200 shares and final call on 300 shares.
Pass journal entries and prepare balance sheet of X Co.Ltd.

SOLU. X CO. LTD.

JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Bank A/c Dr. 15,000
To Share Application A/c 15,000
(Being application money received for 5,000 shares at Rs.3 per share)
 Share Application A/c Dr. 12,000
To Share Capital A/c 12,000
(Being application money on 4,000 shares transferred to share capital A/c)

Share Application A/c Dr. 600

To Bank A/c 600
(Being application money on 200 at Rs.3 per share refunded)

Share Application A/c Dr. 2,400

To Share Allotment A/c 2,400
(Being the surplus application money on 800 shares)

Share Allotment A/c Dr. 16,000

To Share Capital A/c (4,000X2) 8,000
To Securities Premium A/c (4,000X2) 8,000
(Being allotment money at Rs.4 per share on 4,000 shares, including premium at Rs.2
per share)

Bank A/c Dr. 13,600

To Share Allotment A/c(16,000-2,400) 13,600
(Being share allotment money received)

Share First Call A/c Dr. 12,000

To Share Capital A/c 12,000
(Being share first call money at Rs.3 per share due on 4,000 shares)

Bank A/c Dr. 11,400

To Share First Call A/c(200x3)-12,000 11,400
(Being share first call money duly received except on 200 shares)

Share Second Call A/c Dr. 8,000

To Share Capital A/c 8,000
(Being share second call money at Rs.2 per share due on 4,000 shares)

Bank A/c Dr. 7,400

To Share Second Call A/c(300X2)-8,000) 7,400
(Being share second call money duly received except on 300 shares)

WORKING NOTES:
1. Share Capital:
Called up and paid up capital 4,000 shares of Rs.10 each Rs. 40,000
Less: Calls in Arrears:
First Call 600
Final Call 600 Rs. 38,800
2. Reserves and Surplus:
Securities Premium (4,000X2) Rs. 8,000

BALANCE SHEET OF X LTD. AS ON 31ST DEC.

PARTICULARS AMOUNT AMOUNT
I. EQUITY AND LIABILITIES:
(i) Share holder’s funds:
Share Capital 38,800
 Reserves and surplus 8,000

(ii) Non-current liabilities

----
(iii) Current liabilities ----
_____
Total (i) + (ii) + (iii) 46,800

II. ASSETS:
(i) Non-current assets:
Fixed assets: ----

(ii) Current assets: Cash at bank

46,800
Total (i) + (ii) 46,800

10. Udhayam Ltd. issued 6,000 shares to the public @Rs. 100 each, payable as to Rs.12.50 on
application, RS.12.50 on allotment, Rs.25 three months after allotment and the balance to be
called up as and when required. All moneys up to allotment were duly received, but as regards
the call Rs.25, a shareholder holding 200 shares did not pay the amount due. Another share
holder, who was allotted 300 shares paid them up in full.
Show the necessary journal entries to record the above transactions and show how the
capital should appear on the balance sheet.
SOLU. UDHAYAM LTD.
JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Bank A/c Dr. 75,000
To Share Application A/c 75,000
(Being application money received for 6,000 shares at Rs.12.50 per share)

Share Application A/c Dr. 75,000

To Share Capital A/c 75,000
(Being application money on 6,000 shares transferred to share capital A/c)

Share Allotment A/c Dr. 75,000

To Share Capital A/c 75,000
(Allotment money of Rs.12.50 per share due on 6,000 shares)

Bank A/c Dr. 75,000

To Share Allotment A/c 75,000
(Allotment money received on 6,000 shares at Rs.12.50 per share)

Share First Call A/c Dr. 1,50,000

To Share Capital A/c 1,50,000
(First call money due on 6,000 shares at Rs.25 per share)

Bank A/c Dr. 1,60,000

To Share First Call A/c (5,800X25) 1,45,000
To Calls-in-advance A/c (300X50) 15,000
(First call money received on 5,800 shares at Rs.25 per share and calls-in-advance
received on 300 shares at Rs.50 per share)

WORKING NOTES:
 1. Share Capital:
Issued and subscribed capital (6,000X50) Rs.3,00,000
Less: Calls in arrear 5,000 2,95,000
2. Other Current Liabilities:
Calls in advance 15,000

BALANCE SHEET OF UDHAYAM LTD. AS ON 31ST DEC.

PARTICULARS AMOUNT AMOUNT
I EQUITY AND LIABILITIES:
(i) Share holder’s funds:
Share Capital 2,95,000

(ii) Non-current liabilities

----
(iii) Current liabilities 15,000
_______
Total (i) + (ii) + (iii) 3,10,000

II ASSETS:
(i) Non-current assets:
Fixed assets: ----

(ii) Current assets:

Cash at bank 3,10,000
Total (i) + (ii) 3,10,000

11. Mr. Sekar is a shareholder in Kiran Ltd. holding 2,000 shares of Rs. 10 each. He has paid
Rs. 2 and Rs. 3 per share on application and allotment respectively, but failed to pay Rs. 3 and
Rs. 2 per share for first and second call. Directors forfeit his shares. And reissue them at Rs.7
each. Give journal entries.
SOLU. KIRAN LTD.
JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Share Capital A/c Dr. 20,000
To Share First Call A/c (2,000X3) 6,000
To Share Final Call A/c (2,000X2) 4,000
To Forfeiture Share A/c (2,000X(3+2)) 10,000
(Being forfeiture of 2,000 shares of Rs.10 each on account of non-payment of two calls)

12. Ambassadors Ltd. issued 2,000 shares of Rs 100 each at a premium of 10% payable as
follows:
Rs. 25 on application, Rs. 35 on allotment (including premium), Rs 20 on first call. And
Rs. 30 on final call.
1,800 shares were applied for and allotted. All the money was received with the
exception of first and final calls on 200 shares held by Raghu. These shares were forfeited. Give
journal entries and prepare balance sheet.
SOLU. JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr

HOME WORK
13. A company issued 10,000 equity shares of Rs. 10 each at a premium of Rs.3 share payable
Rs. 5 on application, Rs. 5 (including premium) on allotment and the balance on call. All the
shares offered were applied for and allotted. All the moneys due on allotment were received
except on 200 shares. Call was made. The amount due thereon was received except on 300
shares. Directors forfeited 200 shares on which both allotment and call money was not received
Pass the necessary journal entries to record the above and also show how this will
appear in the Balance Sheet of the company.

14. Mohan Ltd. invited applications for 2,000 shares of Rs. 100 each at a discount of 10%
payable as follows:
On application Rs. 25,On allotment Rs. 30,On first and final call Rs. 35
Whole of the issue was subscribed and paid for except the final call on 300 shares which were
forfeited by the company after giving due notice. Pass the forfeiture entry.
SOLU. JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Share Capital A/c (300X100) Dr. 30,000
To Share First And Final Call A/c (300X35) 10,500
To Discount on Issue of Shares A/c (300X10) 3,000
To Forfeiture Share A/c (300X55) 16,500
(Being forfeiture of 100 shares issued at a discount of 10%)

15.The directors of Z' Co. Ltd. forfeit 10 shares of Rs. 50 each belonging to ‘Karthik' who had
paid Rs. 5 per share on application, Rs. 10 on allotment and Rs. 15 on first call but failed to pay
the final call of Rs. 20. The same shares are then reissued to 'Raj' as fully paid on receipt of Rs.
40. Pass journal entries with narration to record the forfeiture and the reissue of shares.
SOLU. Z Co. LTD.
JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
Share Capital A/c (10X50) Dr. 500
To Share Final Call A/c (10X20) 200
To Forfeiture Share A/c (10X30) 300
(For forfeiting 10 shares for non-payment of final call at Rs.20)

Bank A/c (10X40) Dr. 400

Forfeited Shares A/c (10X10) Dr. 100
To Share Capital A/c (10X50) 500
(For reissuing 10 forfeited shares at Rs.40 per share)

Forfeited Shares A/c (300-100) Dr. 200

To Capital Reserve A/c 200
(For transfer of forfeited shares A/c to capital reserve)

16. Good Prospects Ltd. issued 40,000 shares of Rs. 10 each at a premium of Rs. 2 per share.
The shares were payable as follows:
Rs. 2 on application, Rs.5 on allotment (including premium) and Rs. 5 on first & final call.
All the shares were applied for and allotted. All moneys were received with .The exception of
the first and final call on 1,000 shares which were forfeited. 400 of these were reissued as fully
paid at Rs.8 per share.
Give the necessary journal entries, prepare the bank A/c and the balance sheet of the company.
SOLU. GOOD PROSPECTS LTD.
JOURNAL ENTRIES
DATE PARTICULARS L.F. Dr Cr
 Bank A/c Dr. 80,000
To Share Application A/c 80,000
(Being receipt of share application money on 40,000 shares at Rs.2 each)

Share Application A/c Dr. 80,000

To Share Capital A/c 80,000
(Being share application money transferred to share capital A/c)

Share Allotment A/c Dr. 2,00,000

To Share Capital A/c (40,000X3) 1,20,000
To Securities Premium A/c (40,000X2) 80,000
(Being allotment money due on 40,000 shares at Rs.5 including premium)

Bank A/c Dr. 2,00,000

To Share Allotment A/c 2,00,000
(Being receipt of the amount due on allotment)

Share First & Final Call A/c Dr. 2,00,000

To Share Capital A/c 2,00,000
(Being amount of call due)

Bank A/c Dr. 1,95,000

To Share First & Final Call A/c (40,000-1000)X5)
1,95,000
(Being share call money received except on 1,000 shares)

Share Capital A/c (1,000X10) Dr. 10,000

To Share First & Final Call A/c (1,000X5) 5,000
To Forfeited Shares A/c (1,000X5) 5,000
(Being 1,000 shares at Rs.10 each per share forfeited for non-payment of first and final
call)

Bank A/c (400X8) Dr. 3,200

Forfeited Shares A/c (400X2) Dr. 800
To Share Capital A/c (400X10) 4,000
(Being 400 forfeited shares reissued for Rs.8 per share)

Forfeited Shares A/c Dr. 1,200

To Capital Reserve A/c 1,200
(Being proportional amount of share forfeiture A/c transferred to capital reserve A/c)

WORKING NOTE: CALCULATION OF AMOUNT TRANSFERRED TO

CAPITAL RESERVE A/C
Amount credited to forfeited shares A/c in respect of 1,000 shares forfeited
5,000
Proportionate amount for 400 shares reissued Rs.5,000 X 400
2,000 2,000
1,000
Less: Discount on reissued shares (400X2)
800
Transferred to capital reserve
1,200 _____
Amount relating to 600 shares not reissued to be shown in balance sheet
3,000_
 BANK A/C
PARTICULARS Rs. PARTICULARS Rs.
To Share Application A/c 80,000
To Share Allotment A/c 2,00,000
To Share First & Final Call A/c 1,95,000
To Share Capital A/c 3,200 By Balance c/d 4,78,200
4,78,200 4,78,200
To Balance b/d 4,78,200

WORKING NOTE:
1. Share Capital:
Subscribed and paid up capital: (39,400X10)3,94,000
ADD: Forfeited shares A/c 3,000 3,97,000
2. Reserves and Surplus:
Securities premium 80,000
Capital reserve 1,200
81,200

BALANCE SHEET OF UDHAYAM LTD. AS ON 31ST DEC.

PARTICULARS AMOUNT AMOUNT
I EQUITY AND LIABILITIES:
(i) Share holder’s funds:
Share Capital 3,97,000
Reserves and surplus 81,200

(ii) Non-current liabilities ----

(iii) Current liabilities ----
_______
Total (i) + (ii) + (iii) 4,78,200

II ASSETS:
(i) Non-current assets:
Fixed assets: ----

(ii) Current assets:

Cash at bank 4,78,200
Total (i) + (ii) 4,78,200

17. A Ltd. invited applications for 10,000 shares of Rs. 100 each at a discount of 5% payable as
follows. On application Rs. 25, on allotment Rs.54 and on first & final call Rs. 16
Applications were received for 9,000 shares and all of these were accepted. All moneys due
were received except the first and final call on 100 shares which were forfeited. Of the forfeited
shares, 50 shares were reissued at the rate of Rs.90 as fully paid. Show necessary journal entries
in the books of the company.

18. On Ist April 1989, ABC Ltd. issued 1,00,000 equity shares of Rs. 10 each at Rs, 12 per
share payable as to Rs. 5 on application, Rs, 4 on allotment and the balance on 1st July 1989.
The lists closed on 12th April '89 by which date applications for 1,40,000 Shares had been
received. Of the cash received, Rs. 80,000 was returned and Rs, 1,20,000 was applied to the
amount due on allotment, the balance of which was paid on 19th April 1989. All shareholders
paid the call due on 1st July 1989 with the exception of one shareholder for 1,000 shares. These
share were forfeited on 30th Nov. 1989 and reissued as fully paid at Rs,8 per share on 2nd
January 1990. Pass journal entries in the books of ABC Ltd.

19. Ambitions Ltd. issued a prospectus, inviting applications for 2,00,000 shares of Rs. 10 each
at a premium of Rs. 5 per share, payable as follows:
On application - Rs. 2.50 per share
On allotment - Rs. 7.50 per share (including premium)
On first call - Rs.4.00 per share
On final call - Rs. 1.00 per share.
Applications were received for 3,00,000 shares and allotment was made pro-rata to the
applicants of 2,40,000 shares, the remaining applications being refused. Money received in
excess on the application was adjusted towards the amount due on allotment.
David, to whom 4,000 shares were allotted, failed to pay allotment money and on his failure to
pay the first call, his shares were forfeited. Madan, the holder of 6,000 shares, failed to pay the
two calls and so his shares were also forfeited. All these shares were sold to Robert, credited as
fully paid for Rs. 8 per share:
Pass journal entries to record the above issue of shares by the company.

20. Wye Ltd. issued for public subscription 20,000 equity shares of Rs. 10 each at a premium of
Rs. 2 per share payable as under
On application - Rs. 2 per share
On allotment - Rs. 5 per share
On first cal - Rs. 2 per share
On second call - Rs. 3 per share
Applications were received for 30,000 shares. Allotment was made pro-rata to the applicants for
24,000 shares, the remaining applications were refused. Money over paid on application was
utilised towards sums due on allotment.
Akbar to whom 800 shares were allotted, failed to pay allotment and calls money and Babar to
whom 1,000 shares were allotted failed to pay the two calls. These shares were subsequently
forfeited after the second call was made. All the forfeited shares were sold to Charles as fully
paid up at Rs. 8 per share.
Show the journal entries in the books of Wye Ltd.

21. A company forfeited 10 shares of Rs. 10 each, for Non-payment of final call of Rs.3 per
share. Out of these, 7 share were reissued at Rs.9 per share as fully paid up. Give necessary
journal entries in the books of the company.

22. Velavan Pharma Ltd. Made an issue of 1000 shares Rs.100 each, payable as follows.
Rs. 20 on application; Rs.40 on allotment; Rs.40 on call. All the shares were subscribed for by
the public. All the amount due were received except the final call on 100 shares. The shares
were forfeited and reissued at Rs. 70 per share. Pass journal entries.

23. Super Star Limited issued a prospectus inviting applications for 50,000 equity shares of
Rs.10 each, payable Rs.5 on application (including Rs.2 as premium), Rs.4 on allotment and the
balance towards first and final call.
Applications were received for 65,000 shares. Application money received on 5000 shares was
refunded with letters of regret and allotments were made pro-rata to the applicants of 60,000
shares. Money over paid on applications including premium was adjusted on account of sums
due on allotment.
Mr. sathish to whom 700 shares were allotted failed to pay the allotment money and his shares
were forfeited by the directors on his subsequent failure to pay the call money.
All the forfeited shares were subsequently issued to Mr.Jegan credited as fully paid for Rs.9 per
share.
You are required to set out the journal entries and relevant entries in the cash book.

24. A Limited invited applications for 10,000 equity shares of rs.100 each at a premium of
Rs.10 per share. Payment was to be made as follows:
On application – Rs.20
On allotment – Rs.40 (including premium)
On first call – Rs.30
On final call – Rs.20
Applications totaled for 13,000 shares. Applications for 2000 shares were rejected and
allotment of shares were made proportionately to the remaining applicants. The directors made
both the calls and all the money received except the final call on 300 shares which were
forfeited after the required notices were served. Later 200 of the forfeited shares were reissued
as fully paid at Rs.85 per share.
Journalize the transactions and prepare balance sheet.

Redemption of Preference Shares

1.Symcox Ltd., issued 75,000 equity shares of Rs. 10 each and 5,000 Redeemable Preference
Shares of Rs. 100 each all shares being fully called and paid up on31-3-1992. Profit & Loss
account showed undistributed profits of Rs. 3,00,000 and General reserve stood at Rs. 2,50,000.
On 1-4-1992, the directors decided to redeem the existing preference shares at Rs. 105 utilizing
as much profits as would be required for the purpose.
You are required to pass journal entries in the books of the company.

2.The following extract from the balance sheet of Gayathri Co. Ltd. as on 31 st Dec. 2008, is
given to you.
Share capital: Rs.
2,00,000 Equity shares of Rs. 10 each 20,00,000
3,00,000 6% Redeemable Preference Shares of Rs.10 each 30,00,000
Capital Reserve 15,00,000
General Reserve 9,00,000
Profit & Loss A/c 25,50,000
The company exercises its option to redeem the Preference Shares on 1st Jan. 2009. The
company has sufficient cash. Give journal entries to record the redemption.

3.Modern Fibres Ltd. has part of its share capital as 5,000 Redeemable Preference Shares of
Rs. 100 each. When the shares become due for redemption, the company decides that the whole
amount will be redeemed out of a fresh issue of equal amount of equity shares of Rs. 10 each.
Show the journal entries in the books of the company.

4. Sterling Ltd. had part of their share capital in 2,500 6% Redeemable preference shares of Rs,
100 each. The company decided to redeem the Preference Shares at premium of 10%. The
general reserve of the company shows a credit balance of Rs 3,00,000. The directors decide to
utilise 60% of the reserve in redeeming the preference shares and the balance is to be met from
the proceeds of fresh issue of sufficient number of shares of Rs. 10 each. The premium is to be
met from the year's Profit & Loss appropriation account. Give journal entries to record the
above transactions.
5. A company had 10,000 9% redeemable preference shares of Rs 100 each fully paid. The
company decided to redeem the shares on 31st Dec. 2004 at a premium of 10%. The company
made the following issues:
i) 6,000 equity shares of Rs.100 each at a premium of10%
ii) 4,000 8% Debentures of Rs.100 each.
The issue was fully subscribed and allotments were made. The redemption was duly carried out.
The company had sufficient profits. You are required to give the necessary entries.

6. Taylor Ltd. has an authorised capital of Rs. 8,00,000 comprising 2,000 6% Redeemable
Preference Shares of Rs.100 each and 6,000 Equity Shares of Rs.100 each. The Preference
Shares are Redeemable on 31st July 1998 at a premium of 10%.The summarised balance sheet
of the company as on 30.6,1997 was as under:
Liabilities Rs. Assets Rs.
Share Capital: Sundry assets 3,50,000
Authorised Investment 40,000
6,000 equity shares of Rs.100 6,00,000 Bank 72,000
each 2,00,000
2,000 6% Preference shares of
Rs.100 each
Paid up capital
2,500 Equity shares of Rs.100 2,50,000
each
1,000 6% redeemable
Preference shares Rs.100 each 1,00,000
Capital Reserve 10,000
General Reserve 30,000
Profit & Loss A/c 32,000
Sundry Creditor 40,000
4,62,000 4,62,000
The necessary resolutions were duly passed and the following transactions were carried
through.
(i) To provide cash for repayment of redeemable preference shares, the investments were sold
for Rs. 50,000 and 500 equity shares of Rs. 100 each were issued to existing shareholders at Rs.
120 per share payable in full. All moneys were duly received.
(ii) The redeemable Preference Shares were duly redeemed.
You are required to pass the necessary journal entries in the books of the company and also
prepare the amended balance sheet.

7. XYZ Ltd. had issued 20,000 equity shares of Rs. 100 each fully paid and 12,000 redeemable
preference shares of Rs. 100 each fully paid. On 31 st Dec. 1997, the Profit & Loss Account
showed an undistributed profit of Rs. 2, 00,000 and the General Reserve Account stood at Rs. 5,
60.000.
On 1.1.1998, the directors decided to issue 6.000 9% preference shares of Rs. 100 each
and to redeem the existing redeemable preference shares at Rs. 110 each utilising as less profits
as possible for the purpose.
Pass necessary journal entries to record the above transactions. There was a bank
balance of Rs. 8,00,000 on that date.

8. Balance sheet of surya Ltd. On 30th June 2016 was as under:

Liabilities Rs. Assets Rs
Equity share capital 10,00,000 Sundry assets 14,00,000
Redeemable preference share 4,00,000 Bank 5,00,000
capital 3,00,000
 Profit &Loss A/c 2,00,000
Sundry creditors

19,00,00 19,00,000
For the propose of redemption of preference shares, 2000 equity shares of Rs. 100 each were
issued at. The company also issued 8% debentures for Rs.3,00,000. The shares and debentures
were fully subscribed and whole amount has been received. The preference shares were duly
redeemed. Give journal entries and prepare the balance sheet after redemption .

9. Sripriya Ltd. has 8,000 redeemable preference shares of Rs. 100 each fully paid. The
company decides to redeem the shares on 30th September 2016 at a premium of 7%. The
company has sufficient profits but in order to augment liquid fund the following issues are
made.
a) 3,000 6% debentures of Rs. 100each Rs. 110;
b) 2,000 equity shares of Rs.100 each at Rs. 110;
These issues were fully subscribed and all the amount were received. The redemption was duly
carried out. Give the journal entries.

10. Sri Madhav Ltd. in a series of operations:

a) Issues at par 20,000 redeemable preference shares of Rs.10 each redeemable at a premium of
5%;
b) Redeems 10,000 of the redeemable preference shares out of profits of the company;
c) Redeems the balance of the preference shares out of fresh issues of 20,000 equity shares of
Rs. 10 each, issued at a premium of Re.1 per share. Pass necessary journal entries.

11. Chandran Ltd. has an authorised capital of Rs.12,00,000 comprising of 3,000 9%

preference shares of Rs.100 each and 9,000 equity shares of RS.100 each.
The preference shares are redeemable on 1st July 2016 at a premium of 10%.The summarized
balance sheet as on 30th June 2016 was as under.
Liabilities Rs. Assets Rs.
Share Capital: Fixed assets 5,00,000
Authorised Investment 90,000
9,000 equity shares of Rs.100 9,00,000 Bank 70,000
each Other current assets 1,54,000
3,000 6% Preference shares
of Rs.100 each 3,00,000
Paid up capital
4,000 Equity shares of
Rs.100 each 4,00,000
2,000 9% redeemable
Preference shares Rs.100
each 2,00,000
Capital Reserve 20,000
General Reserve 60,000
Profit & Loss A/c 64,000
Sundry Creditor 70,000
8,14,000 8,14,000
The resolution were passed and the following transaction were concluded.
1. To provide cash for repayment of redeemable preference shares the investments were
sold for Rs. 1,00,000 and 1,000 equity shares of Rs. 100 each were issued to existing
shareholders at Rs. 120 per share.
2. The redeemable preference shares were redeemed.
Pass journal entries in the books of the company and prepare the balance sheet.

12. The balance sheet of LKS Co. Ltd as on 31-3-2012 was as follows.

Liabilities Rs Assets Rs
20,000 equity shares of Fixed Assets 2,37,500
Rs.10 each fully paid up 2,00,000 Investments 12,500
10% Redeemable Preference Current Assets 95,000
Shares of Rs.100 each fully Share issue expenses 48,750
paid up 1,00,000
Securities Premium 4,850
Profit & Loss A/c 60,000
Current liabilities 28,900

3,93,750 3,93,750
On the above date, it was decided to redeem the preference shares at a premium of 10%. The
Directors wish that only the minimum number of fresh equity shares of Rs.10 each at a
premium of 5% be issued to provide for redemption of such preference shares as could not
otherwise be redeemed. Give the necessary journal entries and also prepare Balance Sheet after
redemption.

13. The following is the balance sheet of Harbhajan Singh Ltd as on June 30th 1993.
Liabilities Rs Assets Rs
Share capital: Fixed Assets 10,00,000
30,000 , 6% redeemable Investments 2,10,000
preference shares of Rs.10 3,00,000 Current Assets:
each fully paid Stock 4,40,000
60,000 equity shares of Rs.10 6,00,000 Sundry Debtors 1,60,000
each fully paid Cash at Bank 2,20,000
Securities Premium A/c 2,90,000
General Reserve 4,00,000
Profit & Loss A/c 2,45,000
Sundry creditors 1,95,000

20,30,000 20,30,000

The company exercised its option to redeem, on July 1 1993, the whole of the Preference shares
at a premium of 5%.
To assist in financing the redemption, all the investments were sold, realizing Rs.1,95,000.
On September 1, 1993, the company made a bonus issue of seven equity shares fully paid for
every six equity shares held on that day. The appropriate resolutions were passed and the above
transactions were duly completed.
You are required to show the journal entries and the balance sheet of the company as it would
appear after completion of the transaction.
14. Meenakshi Ltd has an issued share capital of 650, 7% redeemable preference shares of
Rs.100 each and 4,500 equity shares of Rs.50 each. The preference shares are redeemable at a
premium of 7 ½ % on April 1 1992.
The company’s balance sheet as on March 31 1992 was as follows:

Liabilities Rs Assets Rs
Share capital : Fixed assets 3,45,000
Issued 650 7% redeemable Investments 18,500
preference shares of Rs.100 Balance at bank 31,000
each fully paid 65,000
4,500 equity shares of Rs.50
each fully paid 2,25,000
Profit & Loss A/c 48,000
Sundry creditors 56,500

3,94,500 3,94,500

In order to facilitate the redemption of preference shares, the company decided:

(i) To sell all the investments for Rs.16,000
(ii) To finance part of the redemption from the company funds, subject to leaving a balance
of Rs.12,000 in the profit and loss account
(iii) To issue sufficient equity shares of Rs.50 each at a premium of Rs.13 per share
to raise the balance of funds required.
The preference shares were redeemed on the due date and the issue of equity shares was fully
subscribed.