ASSIGNMENT- (ISSUE OF SHARE)

1. Define share.
2. Give important characteristics of a company.
3. What is nature of share capital?
4. Write two differences between equity share and preference share.
5. What is meant by issued capital’?
6. What is meant by ‘Subscribed Capital’?
7. What is Reserve Capital? Does it differ from’ Capital Reserve’?
8. What are sweat equity shares?
9. What is employee’s option plan?
10. At least how much portion of the nominal amount of a share must be called as application money?
11. What is the maximum amount of a call according to Table ‘A’?
12. For what purpose securities premium amount can be utilized?
13. What do you mean by buy-back of shares? What are the sources of funds for buy-back.
14. Can securities premium be utilized for the purchase of fixed assets? Give reason.
15. Explain the provisions of Sec.79 regarding the issue of shares at discount.
16. Can forfeited shares be reissued at a discount? If so to what extent?
17. As a director of a company you had invited applications for 30,000 equity shares of Rs. 10 each at premium of Rs. 5 each. The total
application money received at Rs, 2 per share was Rs. 72,000. Name the kind of subscription. List the three alternatives for allotting these
shares.
18. What is Escrow Account?
19. What is meant by issue of shares for consideration other than cash?
20. What is meant by calls in arrears and calls in advance?
21. Bhawana Ltd. Was registered with a nominal capital of Rs. 1, 00,000 divided into shares of Rs. 10 each. The company purchased assets
for Rs. 27,000 from Bhatia. The company issued fully paid equity shares of Rs 10 each in satisfaction of the claim. Shares of Rs. 10,000
were issued at par to the promoters for their services.
Give journal entries of the above transactions if Bhatia were issued shares at (i) Par; (ii) 20% premium (iii) 10% discount.
22. Rohit Ltd. Purchased assets from Rohan & Co. for Rs. 3, 50,000. A sum of Rs. 75,000 was paid by means of a bank draft and for the
balance due Rohit Ltd. issued Equity Shares of Rs. 10 each at a premium of 10%. Journalize the above transactions in the books of the
company.
23. Q Ltd. Purchased the assets of Shyam Ltd. For Rs. 7, 80,000 payable in fully paid shares of Rs. 100 each. Give the necessary journal
entries if such shares are to be issued at a premium of 20%.
24. R Ltd. acquired business of G Ltd. For Rs. 1, 80,000 payable in fully paid, shares of Rs. 100 each. Give the necessary journal entries for
such shares are to be issued at a discount of 10%.
25. Y Ltd. with an authoriesed capital of Rs 1, 00,000 in shares of Rs 100 each, issued 500 of such shares, payable Rs 25 per share on
application, Rs 25 on allotment, Rs 20 three months later, and balances as and when required.
All money payable on application and allotment were duly received but when the call of Rs. 20 per share was made on shareholder
holding 25 shares failed to pay the amount due and another shareholder holding 50 shares paid them in full. Give journal and Balance
sheet.
26. Z Ltd. issued 16,000 equity shares of Rs. 10 each Rs 5 per share was called, payable Rs. 2 on application, Re 1 on allotment,
Re 1 on first call and Re.1 on second call
The amount received was as follows:
On 12,000 shares The full amount called
On 2,500 shares Rs 4 per share
On 1,000 shares Rs 3 per share
On 500 shares Rs 2 per share.
Prepare journal and Balance sheet..
27. A Ltd. issued 80,000 equity shares of Rs 10 each at a premium of Rs 2.50 per share payable as under:
On application Rs 3 per share, on allotment Rs 4.50 (including premium), on first call Rs 2, on second call Rs 3.
Application were received for 1, 70,000 shares out of which applicants for 10,000 shares were rejected and money refunded
to them. The allotment was made prorate to the remaining applicants. Money overpaid on application was used against
allotment money due.
Anil to whom 2,000 shares were allotted failed to pay the allotment money and calls money. Sunil, the holder of 1,200
shares failed to pay the two calls.
Prepare journal and balance sheet.
28. Govind Ltd. issued a prospectus inviting applications for 20,000 share of Rs 10 each at a premium of Rs. 3 per share,
payable as to Rs 4 on application; Rs 5 on allotment ( including premium ); Rs 2 on first call; and Rs 2 on final call.
Applications were received for 27,000 shares. Directors allotted the shares as follows:
To applicants of 16,000 shares full allotment
To applicants of 6,000 shares 4,000 shares
To applicants of 5,000 shares Nil
Give entries in the Cash Book and Journal, assuming that all sums due on allotment and calls have been received.
29. Z Ltd. issued 2,000 shares of Rs. 10 each payable as Rs. 2 on application, Rs. 5 (including Rs 2 premium) on allotment, Rs.
3 on first call and the balance on second and final call: Application were received for 3,000 shares and it was decided.
(a) To refuse allotment to an applicant for 400 shares.
(b) To allot in full to an applicant for 200 shares.
(c) To allot the remaining shares on prorata basis among the other applicants.
(d) To utilize excess application money towards other sums due on shares allotted.
All shareholders, except the following paid their entire sum and when due:
 (1) Mr. X to whom 60 shares were allotted, did not pay anything after application.
(2) Mr. Y who applied for 40 shares, failed to pay calls money.
(3) Mr. Z to whom 15 shares were allotted, failed to pay final call money.
Give journal and the Balance Sheet.
30. Y Ltd. forfeited 100 shares of Rs. 100 each issued at 20% premium ( to be paid at the time of allotment ) for non-payment of
a first call of Rs. 30 per share and a second and final call of Rs. 20 per share. Out of these 40 shares were re-issued as fully
paid up for Rs. 90 per share, journalise.
31. X Ltd. forfeited 100 shares of Rs. 10 each (Rs. 8 called up) issued at premium of 2 per share to Mr. R for non payment of
allotment money of Rs. 5 per share (including premium). Out of these 70 shares were re-issued to Mr. Sanjay as Rs. 8 called
up for Rs. 10 per share. Journalise.
32. ABC Ltd forfeited 3,200 shares of Rs 100 each issued at 10% premium for non payment of allotment money of Rs. 40 per
share (including premium) and first call of Rs 30 per share. The second and the final call of Rs 20 has not yet been called.
Out of these 1,280 shares were re-issued as Rs. 80 paid up for Rs. 70 per share, Journalise.
33. Upendra Ltd. forfeited 40 shares of Rs 10 each, issued at a discount of 10% for non-payment of a final call of Rs 2 per share.
Out of these 10 shares were re-issued as fully paid for Rs. 8.50 per share, Journalise.
34. Madhu Ltd. forfeited 80 shares of Rs. 10 each, issued at a discount of 10% for non payment of first call of Rs. 2 per share.
The second and final call of Rs. 3 per share has not yet been called. Out of these, 20 shares were re-issued as Rs 7 paid up for
Rs. 5 per share, Journalize.
35. Anand Ltd, forfeited 10 shares of Rs 10 each (Rs. 6 called up ) issued at a discount of 10% to Mr. Y on which he had paid
an application money of Rs. 2 per share. Out of these, 8 shares were re-issued to Z as Rs 8 called up for Rs. 9 per share.
Journalize.
36. X Ltd. issued equity shares of Rs 10 each at a premium of Rs 2.50 per share payable as to Rs 3 per share on application, Rs
4.50 per share on allotment (including premium), Rs 2 per share on first call and Rs 3 per share on final call. Anil, who
applied for 4,000 shares, was allotted 2,000 shares. He failed to pay allotment money and on his subsequent failure to pay
the first call, his shares were forfeited.
Sunil, who applied for 2,400 shares, was allotted 1,200 shares. He failed to pay the two calls and his shares were forfeited.
Of these, 2,400 shares were re-issued to credit as fully paid for Rs.8 per share, the whole of Anil shares being included.
Give journal entries to record the forfeiture and re-issue of shares assuming that X Ltd.follows the practice of adjusting
excess application money towards other sums due on shares.
37. A holds 100 shares of Rs 10 each on which he has paid Re 1 per share on application.
B holds 200 shares of Rs.10 each on which he has paid Re. 1 per share and Rs.2 per share on application and allotment
respectively.
C holds 300 shares of Rs 10 each and has paid Re. 1 on application, Rs 2 on allotment and Rs. 3 on first call.
They all fail to pay their arrears and the second call of Rs. 2 per share. Shares are forfeited and subsequently re-issued at Rs.
11 per share as fully paid. Journalize to record forfeiture and re-issue of shares.
38. Suraj Ltd. issued 1,00,000 shares of Rs. 10 each at a premium of Rs. 3 per share, payable at Rs. 2 on application, Rs 5 on
allotment (including premium), Rs.4 on first call and Rs. 2 on final call. Applications were received for 1, 50,000 shares. The
application money on 30,000 shares has refunded. Allotment was made prorate to the remaining applicants. A, the holder of
200 shares, failed to pay the allotment money and his shares were forfeited on his failure to pay the first call money. B, the
holder of 300 shares failed to pay first call and final call and his shares were forfeited. Of the shares forfeited, 400 were re-
issued to C credited as fully paid for Rs 9 per share. The 400 shares include all A’s shares
Show the necessary journal entries and Cash Book entries to record the above transaction and prepare the Balance Sheet of
the company.
39. S Ltd. issued for public subscription 40,000 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 (including premium), On first call Rs 2 per share, On second call
Rs 3 per share.
Application was received for 60,000 shares. Allotment was made prorate to the applicants for 48,000 shares the remaining
applications being refused. Money overpaid on application was applied towards sums due on allotment.
A, to whom 1,600 shares were allotted failed to pay the allotment money and B to whom 2,000 shares were allotted failed to
pay the two calls. These shares were subsequently forfeited after the second call was made. Of the forfeited share, 3,000
shares were reissued to C credited as fully paid at Rs. 8 per share the whole of B’s shares being included.
Pass journal entries in the books of S Ltd.
40. Bharat Ltd invited applications for issuing 2,00,000 equity shares of Rs. 10 each at a discount of Re. 1 per share. The amount
was payable as follows:
On Application Rs. 3 per share
On Allotment Rs. 4 per share
On First and Final call Rs. 2 per share
Application for 3,00,000 shares were received and pro-rata allotment was made to all the applicants on the following basis:
Applications for 2,00,000 shares were allotted 1,50,000 shares on pro-rata basis.
Applications for 1,00,000 shares were allotted 50,000 shares on pro-rata basis.
Bajaj who was allotted 3,000 shares out of the group applying for 2,00,000 shares failed to pay the allotment money. His
shares were forfeited immediately after allotment.
Sharma who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call.
His shares were also forfeited. Out of the forfeited shares 3,500 shares were re-issued as fully paid up @ Rs. 8 per share. The
re-issued shares included all the forfeited shares of Bajaj. Pass the necessary journal entries to record the above transactions.