E-notes 07 _ Notes (Company Accounts - Share Capital)

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CHAPTER-7 Company Accounts - Share Capital

A company is an artificial person created by law, having separate legal entity with a
perpetual succession and a common seal.
Features of a Company:
1. Voluntary Association
2. Separate Legal Entity
3. Limited Liability
4. Perpetual Succession
5. Common Seal
6. Transferability of Shares
7. May Sue or be Sued
Types of Companies:
1. Public Company: A public company means a company which (a) is not a private
company, (b) has minimum capital of ₹ 5 lac on such higher paid-up capital may be
prescribed, and (c) is a private company which is a subsidiary of which is not a private
company
2. Private Company: A private company is one which has a minimum paid up capital of ₹
1 Lac or such higher paid-up capital as may be prescribed by its Articles :
(a) Restricts the right to transfer its shares;
(b) Limits the number of its members to 200 (excluding its employees), except in case
of an OPC;
(c) Prohibits any invitation to the public to subscribe for any shares in or debentures
of the company.
(d) Prohibits any invitation or acceptance of deposits from person other than its
members, directors, and relatives.
3. One Person Company - One person company means a company which has only one
person as member. Only a natural person who is an Indian citizen and resident in India
shall be eligible to incorporate a One Person Company and shall be a nominee for the
sole member of a One Person Company. The term “resident in India” means a person
who has stayed in India for a period of not less 182 days immediately preceding one
calendar year.
Share Capital of a Company

A company, being an artificial person, cannot generate its own capital which has necessarily to
be collected from several persons. These persons are known as shareholders and the amount
contributed by them is called share capital.
Since the number of shareholders is very large, a separate capital account cannot be opened for
each one of them. Hence all the capital contributions are pooled together in a common capital
account called as ‘Share Capital Account’.
A share is a share in the share capital of the company.
Categories of Share Capital
1. Authorized Capital: Authorized capital is the amount of share capital which a company
is Authorized to issue by its Memorandum of Association. The company cannot raise
more than the amount of capital as specified in the Memorandum of Association. It is
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also called nominal or registered capital. It should be noted that the company need not
issue the entire Authorized capital for public subscription at a time. It should not be more
than the amount of Authorized capital.
2. Issued Capital: It is that part of the Authorized capital which is actually issued to the
public for subscription including the shares allotted to vendors and the signatories to the
company’s memorandum. The Authorized capital which is not offered for public
subscription is known as ‘unissued capital’. Unissued capital may be offered for public
subscription at a later date.
3. Subscribed Capital: It is that part of the issued capital which has been actually subscribed
by the public. It may be noted that ultimately, the subscribed capital and issued capital
are the same because if the number of shares, subscribed is less than what is offered, the
company can allot only the number of shares for which subscription has been received.
4. Called-up Capital: It is that part of the subscribed capital which has been called up on
the shares. The company may decide to call the entire amount or part of the face value of
the shares. For example, if the face value (also called nominal value) of a share allotted is
₹ 10 and the company has called up only ₹ 7 per share, in that scenario, the called up
capital is ₹ 7 per share. The remaining ₹ 3 may be collected from its shareholders as and
when needed.
5. Paid-up Capital: It is that portion of the called up capital which has been actually
received from the shareholders. When the shareholders have paid the entire call amount,
the called-up capital is the same to the paid-up capital. If any of the shareholders has not
paid amount on calls, such an amount may be called as ‘calls in arrears’. Therefore, paid-
up capital is equal to the called-up capital minus call-in-arrears.
6. Uncalled Capital: That portion of the subscribed capital which has not yet been called-
up. As stated earlier, the company may collect this amount any time when it needs
further funds.
7. Reserve Capital: A company may reserve a portion of its uncalled capital to be called
only in the event of winding up of the company. Such uncalled amount is called ‘Reserve
Capital’ of the company. It is available only for the creditors on winding up of the
company.
Authorized Capital
Issued Capital Unissued Capital
Subscribed Capital Unsubscribed Capital
Called Up Capital Uncalled Capital
Paid Up Capital Calls in Arrear Unreserved Capital Reserved Capital
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Types/Classes of Share Capital:
1. Preference Shares: These are the shares that carry two rights - preferential right as to
dividend and preferential right as to repayment on winding up.
2. Equity Shares: These are those that do not carry and preferential right. They are
subordinate to preference shares in respect of dividend and repayment.
Stages of Issue and Allotment of Shares
Stage-I: Issue of Prospectus inviting the public for subscription of given number of shares at a
certain price.
Stage-II: Receipt of Applications along with application money from public
Stage-III: Allotment of shares on fulfillment of certain conditions of minimum subscription etc.
Finally share certificates are issued to all the allottees; thereby making them the shareholders of
the company for given number of shares.
Stage-IV: Call Money: The part of share value not earlier called for by the company is
subsequently called as and when the company is in need of funds. The calls can be made by the
company any number of times and of any amount, however the total amount called cannot
exceed the issue price.
Share Issue Price
Shares of a company are issued either at par, at a premium.

Shares are said to have been issued at par when their issue price is exactly equal to their
nominal value/par value according to the terms and conditions of issue.
When the shares of a company are issued more than its nominal value (face value), the excess
amount is called premium and the issue is said to have been made at a premium.
When the shares are issued at a price less than the face value of the share, it is known as shares
issued at a discount. A company cannot issue shares at a discount except issue of shares to
employees as ESOP or sweat equity shares.
Market response to invitation of share issue

When a company invites application from public for subscription of its shares, the response to
such issue depends on number of macro/micro economic factors like- economy trend, political
scenario, company image/reputation, share issue price, industry situations etc.
As a result of all these factors the response to such issue can be classified into 3 situations:
1. Full subscription – It is a situation when the number of shares applied for by the public is
exactly equal to the number of shares the company intends to issue. In this case the
company goes on to allot the applied shares to each and every applicant in exactly the same
numbers applied by them.
2. Under subscription – It is a situation when the number of shares applied by the public falls
short of the number of share the company intends to issue. Unless 90% of issue is
subscribed, the company cannot go ahead with allotment of shares.
3. Over subscription - It is a situation when the number of shares applied for by the public
exceeds the number of shares the company intends to issue. It is a favorable situation for the
company as it shows the huge number of interested investors. However the company cannot
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allot shares to each and every shareholder as the company can allot only those number of
shares for which it has invited applications.
Here the company has to make choice (without prejudice to any applicant) as to how the
allotment of limited shares to be made. Some of the alternative strategies are:
a. Pro-rata allotment to all

b. Outright rejection for excess share applications
c. Some rejections and pro-rata allotment to others
d. Some rejections, some full allotments and pro-rata allotment to remaining
e. Or any other combination of above.
Issue of shares (At a Glance)
Issue of shares for cash Issue of shares other than for cash ESOP
At Par At Premium Purchase of Asset Business Purchase
At Par At Premium
Full Subscription Over Subscription Under Subscription
All Monies Received (No default) Forfeiture of Share (For default in payment)
Reissue of Shares Shares held in Forfeiture and not yet reissued
At Par At Premium At Discount
Calls in arrear and calls in advance
Calls in arrear: It often happens that shareholders do not pay the call amount when it becomes
due. When any shareholder fails to pay the amount due on allotment or on any of the calls,
such amount is known as ‘Calls-in-Arrears’/‘Unpaid Calls’. Calls-in- Arrears represent the
debit balance of all the calls account and are shown as a deduction from the paid-up capital on
the liabilities side of the balance sheet.
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The Articles of Association of a company usually empower the directors to change interest at a
stipulated rate on calls in arrears. In case the articles are silent in this regard, the rule contained
in Table F shall be applicable which states that the interest at a rate not exceeding 10% p.a.
shall have to be paid on all unpaid amounts on shares for the period intervening between the
day fixed for payment and the time of actual payment thereon.
On receipt of the call amount together with interest, the amount of interest shall be credited to
interest account while call money shall be credited to the respective call account or to calls-in-
arrears account.
Calls in Advance: Sometimes some shareholders pay a part or the whole of the amount of the
calls not yet made. The amount so received from the shareholders is known as “Calls in
Advance”. The amount received in advance is a liability of the company and should be credited
to ‘Call-in-Advance Account.” The amount received will be adjusted towards the payment of
calls as and when they become due. Table F of the Companies Act provides for the payment of
interest on calls in advance at a rate not exceeding 12% per annum.
Issue of shares at Premium (Section 52)
When a share of the nominal value of ₹ 100 is issued at ₹ 105, it is said to have been issued at a
premium of 5 per cent.
When the issue of shares is at a premium, the amount of premium may technically be called at
any stage of the issue of shares. However, premium is generally called with the amount due on
allotment, sometimes with the application money and rarely with the call money. The premium
amount is credited to a separate account called ‘Securities Premium Account’ and is shown on
the liabilities side of the company’s balance sheet under the heading ‘Reserves and Surpluses’.
It can be used only for the following purposes as laid down by Section 52 of The Companies
Act 2013:
(a) to issue fully paid bonus shares to an extent not exceeding unissued share capital of the
company;
(b) to write-off preliminary expenses of the company;
(c) to write-off share/debenture/securities issue expenses or commission paid, or discount
allowed on any of the shares or debentures of the company; and
(d) to pay premium on the redemption of preference shares or debentures of the company.
(e) in buy-back of its own shares by the company.
Issue of shares at Discount (Section 53, 54)
A company shall not issue shares at a discount and any share issued by a company at a
discounted price shall be void. However, issued of sweat equity shares is permitted as provided
in Section 54.
When a share of the nominal value of ₹ 100 is issued at ₹ 98, it is said to have been issued at a
discount of two per cent.
A company cannot ordinarily issue shares at a discount. It can do so only in cases such as
‘reissue of forfeited shares’ and in accordance with the provisions of section 54 of The
Companies Act 2013 for issue of Sweat Equity Shares.
It states that, a company is permitted to issue shares at a discount provided the following
conditions are satisfied:
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a) The issue is authorized by a special resolution passed by the company.

b) The resolution specifies the number of shares, the current market price, consideration, if
any, and the class or classes of directors or employees to whom such equity shares are to
be issued.
c) Not less than one year has, at the date of such issue, elapsed since the date on which the
company had commenced business.
d) Where the equity shares of the company are listed on a recognized stock exchange, the
sweat equity shares are issued in accordance with the regulations made by the Securities
and Exchange Board in this behalf and if they are not so listed, the sweat equity shares
are issued in accordance with such rules as may be prescribed.
e) The rights, limitations, restrictions and provisions as are for the time being applicable to
equity shares shall be applicable to the sweat equity shares issued under this section and
the holders of such shares shall rank pari passu with other equity shareholders.
Accounting Entries
Following are the journal entries in respect of issue of share capital in different situation:
I. Issue of shares at Par (Situation of Full subscription)
a. At the time of Application
Bank A/c Dr.

To Share Application A/c
b. On Allotment (transfer of application money to capital)
Share Application A/c Dr.

To Share Capital A/c
c. On Allotment money due
Share Allotment A/c Dr.

d. On receipt of allotment money
Bank A/c Dr.

To Share Allotment A/c
e. On making amount due on 1st call
Share 1st Call A/c Dr.

f. On receipt of call money
Bank A/c Dr.

To Share 1st Call A/c
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g. On making amount due on 2nd & Final call
Share 2nd & Final Call A/c Dr.

h. On receipt of call money
Bank A/c Dr.

To Share 2nd & Final Call A/c
II. Issue of shares at Premium (Situation of Full subscription)
Bank A/c Dr.

b. On Allotment (transfer of application money to capital)
Share Application A/c Dr.

c. On Allotment money due

To Securities Premium A/c
Note: Generally premium is adjusted at the time of allotment unless otherwise specified
d. On receipt of allotment money
Bank A/c Dr.


f. On receipt of call money
Bank A/c Dr.


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Bank A/c Dr.

III. Issue of shares at Par/Premium (Situation of under subscription)
Same set of entries as given under case I & II above are done in a situation of under subscription.
The only difference lies in the fact that the number of shares applied for by the public is used in
all calculation in place of shares issued by company.
IV. Issue of shares at Par/Premium (Situation of Over subscription)
In a situation of over subscription, the company goes ahead with allotment of share in a way
that the shares allotted does not exceed the shares issued. Certainly the excess applications are
dealt with either through rejections or pro-rata allotment or full allotment to some applicants or
a combination of all these alternate ways.
Bank A/c Dr.

b. On Allotment (transfer of application money to capital/Excess money to future calls)
Share Application A/c Dr. A statement of excess

To Share Capital A/c amount received on applied
To Share Allotment A/c shares vis-à-vis allotted
To Share 1st Call A/c shares is made to find out
To Share 2nd & Final Call A/c excess amount available for
adjustment against future
c. On Allotment money due calls

d. On receipt of allotment money Amount received on

allotment is calculated after
Bank A/c Dr. taking into consideration
To Share Allotment A/c excess adjusted in entry no-b
above

Amount received on call is
f. On receipt of call money calculated after taking into
consideration excess
Bank A/c Dr. adjusted in entry no-b above
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Amount received on call is
Bank A/c Dr. calculated after taking into
To Share 2nd & Final Call A/c consideration excess
adjusted in entry no-b above
Note: The above entries are done in the same manner even in case of shares issued at premium.
However adjustment of premium has to be made as done in case II earlier.
Forfeiture of Shares
Sometimes it may happen that some shareholders fail to pay one or more installments, viz.
allotment money and/or call money. In such circumstances, the company can forfeit their
shares, i.e. cancel their allotment and treat the amount already received thereon as forfeited to
the company within the framework of the provisions in its articles. The directors can forfeit the
shares for nonpayment of calls made. For this purpose, they have to strictly follow the
procedure laid down in this regard under the Act.
When shares are forfeited all entries relating to the shares forfeited, except those relating to
premium, already received and recorded, must be reversed. Accordingly the journal entry will be
as follows:
Case-I: When shares were originally issued at Par
Share Capital A/c Dr.

To Forfeited Shares A/c
Note: Share capital is debited and closed with the amount already called up till the stage of forfeiture.
Allotment & calls are credited and closed with the amount not received (defaulted amount).
Case-II: When shares were originally issued at Premium
Share Capital A/c Dr.

Securities Premium A/c Dr.
To Forfeited Shares A/c
Note: Share capital is debited and closed with the amount already called up till the stage of forfeiture.
Allotment & calls are credited and closed with the amount not received (defaulted amount). Securities
Premium account is debited and closed for only such amount of premium which has not been received.
The premium which has been already paid by the shareholder cannot be reversed as this will be in
violation of section 52 of the Act.
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Re-issue of Forfeited Shares
The directors can either cancel or re-issue the forfeited shares. In most cases, however, they
reissue such shares which may be at par, at premium or at a discount. Re-issue of forfeited shares
is not allotment but only a sale or auction of shares.
When the forfeited shares are reissued at par or at premium, the amount available in share
forfeiture account is not utilized as no discount has been offered to the new shareholder against
the face value of such shares.
As a result the amount of share forfeiture represents the capital profits and hence transferred to
capital reserve account on completion of reissue.
The forfeited shares can be reissued at a discount. However this discount so offered cannot
exceed the amount forfeited on such shares.
This implies that:
Discount on reissue of forfeited share ≤ Amount of forfeiture
The following journal entries are made:
1. Reissue at par
Bank A/c Dr.
Forfeited Shares A/c Dr.

To Capital Reserve
2. Reissue at premium
Bank A/c Dr.

To Capital Reserve
3. Reissue at Discount
Bank A/c Dr.


To Capital Reserve
It is to be noted in this context is that the capital profit arises only in respect of the forfeited share
reissued, and not on all forfeited shares. Hence, when only a part of the forfeited shares is reissued, the
whole balance of Share Forfeited Account cannot be transferred to the capital reserve. In such a
situation, it is only the proportionate amount that relates to the forfeited shares reissued which should
be transferred to capital reserve, ensuring that the remaining balance in Share forfeited Account is
equal to the amount forfeited on shares not yet reissued.
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Issue of shares other than for cash
Sometimes the company can issue shares not for cash but in satisfaction of its liability towards
vendor for any purchase of asset or in such cases where it acquires the business of another
entity. Shares can also be issued to promoters as payment in lieu of their services.
The shares so issued can be at par or premium as per the arrangement b/w the company and
vendor.
No: of shares issue = Total amount payable / Issue price per share
Case-I: Issue of share for purchase of an asset

Asset A/c Dr.
To Vendor A/c
Vendor A/c Dr.

Case-II: Issue of share for purchase of Business

Sundry Assets A/c Dr.
Goodwill A/c Dr. * (Any One)
To Sundry Liabilities A/c
To Vendor A/c
To Capital Reserve A/c *
Vendor A/c Dr.

Issue of Shares to Promoters and Underwriters
Sometimes, a company may issue shares to the promoters, for the services which they have
rendered for the formation of the company. Usually, these services include providing
information related to technology, research and development, management, lay out for setting
up a plant and all efforts for the incorporation of a company.
As these services are necessary for formation of a company, so the expenses are booked in the
form of Formation Expenses or Goodwill.
The following journal entry shall be passed:
Formation Expenses/Goodwill A/c Dr.

Similarly, shares can also be issued to the underwriters of the company for rendering
underwriting services. The following journal entries shall be passed:
1. For Underwriting Commission Due to Underwriters
Underwriting Expenses A/c Dr.

To Underwriter’s A/c
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2. For issue of share to Underwriters
Underwriter’s A/c Dr.

Employees Stock Option Plan (ESOP)
Employees Stock Option Plan is a plan drawn to issue securities (Shares etc.) to employees
(including whole time directors) at a discount i.e., at a price which is lower than its market
value.
The Companies Act, 2013 (Section 53) prohibits issue of shares at a discount. But, through
Section 54, it permits issue of ESOPs at a discount.
Terms Meaning
Grant Date Date on which the company and employees agree to the Plan.
Vesting Period Period between the grant date and the date on which all the specified
conditions of Employees Stock Option Plan (ESOP) are satisfied. The
minimum period should be one year.
Vesting Date Date on which an employee satisfies the specified conditions and thus,
becomes entitled to the options.
Exercise It means making an application by an employee for issue of shares against
the options vested in him.
Exercise Period Period after vesting within which an employee should exercise the right to
apply under the Plan.
Exercise Price Price payable by the employee for exercising the right for option granted.
The difference between Market Value and Issue Price is the cost to the company.
Since the Options are given to employees at a price lower than market price, it is an expense.
The following journal entry is passed:
1. During the vesting period

Employees Compensation Expense A/c Dr.
To Shares Option Outstanding A/c
Employees Compensation Expense A/c is shown under ‘Employees Benefit Expenses’ in the
Statement of Profit and Loss. Shares Options Outstanding Account is shown as Reserves and
Surplus under Shareholders’ Funds.
2. For transfer of expense to P&L Account
Profit & Loss A/c Dr.

To Employees Compensation Expense A/c
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3. When all option is exercised by the Employees

Bank A/c Dr.
Shares Options Outstanding A/c Dr.
To Securities Premium Reserve A/c
4. When all options are not exercised by the employees
Bank A/c Dr.

Shares Options Outstanding A/c Dr.
To Securities Premium Reserve A/c
To General Reserve A/c
Balance Sheet Extract (Disclosure of Share Capital)
S.No Particulars Sch No Current Year Previous Year

Amount (₹) Amount (₹)
(A) EQUITY & LIABILITIES
1. Shareholders’ funds
(a) Share Capital I
(b) Reserves & Surplus II
Schedules forming part of the Balance Sheet:

I. Share Capital:
Particulars Current Year Previous Year
Authorized Capital
XXXX Shares of ₹ XX/- each xxx xxx
Issued & Subscribed Capital
XXX Shares of ₹ XX/- each xxx xxx
Paid-up Capital
XXX Shares of ₹ XX/- each fully called-up xxx xxx
Less: Calls-in arrear xxx xxx
Add: Shares Forfeited xxx xxx
II. Reserves & Surplus:

Particulars Current Year Previous Year
Revenue Reserve xxx xxx
General Reserve xxx xxx
Capital Reserve xxx xxx
Securities Premium xxx xxx
Shares Options Outstanding Account xxx xxx
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Concept of Private Placement of Shares
According to Section 42 of the Companies Act, 2013, Private placement means any offer of
securities or invitation to subscribe securities to a select group of persons by a company (other
than by way of public offer) through issue of private placement offer letter and which satisfies the
conditions specified in this section. Therefore when securities are offered to the select group of
persons it is known as the Private Placement of shares. The following conditions are to be
fulfilled:
1. Offer of securities shall be made in a financial year to persons not exceeding 50 in number or
such higher number as may be prescribed. The maximum number of persons to whom offer
of Private Placement can be made is prescribed as 200.
2. Qualified Institutional buyers and employees of the company offered securities under a
scheme of employee stock option are excluded.
3. Fresh offer or invitation shall not be made unless the allotments with respect to any offer or
invitation made earlier have been completed or that offer or invitation has been withdrawn or
abandoned by the company.
4. The amount of subscription should not be less than ₹ 20,000.
5. All monies payable towards subscription of securities shall be paid through cheque or bank
draft or any other banking instrument but not by cash.
6. The company shall allot its securities within 60 days from the date of receipt of application
money. If the company is unable to allot securities within 60 days, it shall refund the
application money within 15 days from the day of completion of 60 days. And if the company
is unable to refund the application money within 15 days from the day of completion of 60
days, it shall pay interest @ 12% p.a. from the expiry of sixtieth day.
7. Money received on application shall be kept in a separate Bank Account and shall be utilized:
i. for adjustment against allotment of securities; or
ii. for the repayment of money against which the company is unable to allot securities.
8. Offers shall be made only to such persons whose names are recorded by the company prior to
the invitation to subscribe.
9. Complete information of the offer shall be filed with the Registrar of Companies within 30
days of the circulation of offer for private placement.
10. The company shall not issue any public advertisement or use any media, marketing or
distribution channels or agents to inform the public at large about the offer.
The money receivable by the company may be received in lump sum or installments. The
journal entries that are to be passed under this situation is similar to that which are passed in
case the shares are issued to public for cash.
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Test Your Knowledge & Practice
Issue of Shares for Cash at Par
1. A company issued 2,50,000 Equity Shares of ₹ 10 each to public. All amounts have been
received in lump sum. Pass necessary Journal entries in the books of the company.
2. XYZ Ltd. invited applications for 10,000 shares of ₹ 10 each payable as ₹ 2 on application, ₹
3 on allotment, ₹ 2 on first call and the balance on final call. All the shares were applied and
allotted. All the money was duly received. You are required to Journalize these transactions.
3. A Company was registered with a Nominal Capital of ₹ 10,00,000 divided into 10,000 shares
₹ 100 each; payable ₹ 10 per share on application, ₹ 20 per share on allotment and balance
on first and final call. All the shares were taken up and fully paid for by the public. Pass
Journal entries to record the issue of shares.
4. The authorized capital of ₹ 16,00,000 of XYZ Ltd. is divided into 1,60,000 Equity Shares of
₹ 10 each. Out of these shares, 80,000 Equity Shares were issued to the public. The full
nominal value is payable on application. All the shares were subscribed by the public and
total amount was paid for. Give necessary Journal entries in the books of the company.
5. A company was registered with an Authorized Capital of ₹ 10,00,000 divided into 7,500
Equity Shares of ₹ 100 each and 2,500 9% Preference Shares of ₹ 100 each. 1,000 Equity and
500 Preference Shares were offered to public on the following terms—Equity Shares payable
₹ 10 on application, ₹ 40 on allotment and the balance in two calls of ₹ 25 each. Preference
Shares are payable ₹ 25 on application, ₹ 25 on allotment and ₹ 50 on first and final call. All
the shares were applied for and allotted. Amount due was duly received. Prepare Cash Book
and pass necessary Journal entries to record the above issue of shares and show how the
Share Capital Account will appear in the Balance Sheet.
Undersubscription
6. B Ltd. was registered with a capital of ₹ 6,00,000 in shares of ₹ 10 each. It issued a

prospectus inviting applications for 6,000 shares at par payable as ₹ 4 on Application, ₹ 2 on
Allotment, ₹ 2 on First Call and ₹ 2 on Second Call. Applications were received for 5,400
shares. All money was duly received. Pass the necessary Journal entries.
7. A Ltd. invited applications for 6,000 Equity Shares of ₹ 10 each issued at par. The whole
amount was payable on application. The issue was under subscribed by 1,000 shares. Pass
the necessary Journal entries.
8. The Kalyan Cotton Mills Ltd. was registered on 1st January, 2023 with a capital of ₹
10,00,000 divided into 1,00,000 shares of ₹ 10 each. The company issued 42,000 shares of
which 40,000 shares were taken up by the public and ₹ 1 per share was received with
application. On 1st February, these shares were allotted and ₹ 2 per share was duly received
on 28th February as allotment money. A first call of ₹ 3 per share was made on 1st March
and the call money on all shares with the exception of 100 shares was received. The final call
of ₹ 4 per share was made on 1st June and the amount due, with the exception of 400 shares,
was received by 30th June.
Pass necessary Journal and Cash Book entries and prepare the Balance Sheet as at 30th June,
2023.
(Ans: Balance Sheet Total: ₹ 3,98,100)
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9. D Ltd. invited application for 2,00,000 equity shares and 3,00,000 preference shares of ₹ 10
and ₹ 20 per share respectively payable as follows:
Equity Shares (₹) Preference Shares (₹)
On Application 2 5
On Allotment 4 6
On First Call 3 4
On Final Call 1 5
Applications were received for 1,80,000 equity shares and 4,20,000 preference shares.
Applications for equity shares were accepted in full. Applications for preference shares were
allotted as follows:
Applications for 2,00,000 shares - 1,50,000
Applications for 1,50,000 shares - 1,00,000
Applications for 70,000 shares - 50,000
All the money duly received except allotment and call money on 2,000 equity shares.
Journalize.
(Ans: Allotment received: Equity shares: ₹ 7,12,000 and Preference shares: ₹ 12,00,000 respectively)
Oversubscription
10. Y Ltd. invited applications for 6,000 Equity Shares of ₹ 10 each issued at par. The whole
amount was payable on application. The issue was oversubscribed by 1,200 shares. Pass the
necessary Journal entries.
(Ans: Surplus Refunded: ₹ 12,000)
11. X Ltd. invited applications for 10,000 Equity Shares of ₹ 10 each issued at par. The whole
amount was payable on application. The issue was oversubscribed by 2,000 shares and
allotment was made on pro rata basis. Pass necessary Journal entries.
12. ABC Ltd. invited applications for 50,000 shares of ₹ 10 each payable ₹ 3 on application, ₹ 4
on allotment and balance on first and final call. Applications were received for 60,000 shares.
Applications were accepted for 50,000 shares and remaining applications were rejected. All
calls were made and received except First and Final call on 500 shares. Pass the Journal
entries in the books of ABC Ltd.
13. ABC Company Ltd. offered for subscription 20,000 shares of ₹ 10 each payable ₹ 2.50 on
application and ₹ 5 on allotment for each share. Applications were received for 30,000
shares. Letters of regret were issued to applicants for 5,000 shares and their application
money was refunded. Application money for other 5,000 shares was applied towards the
payment for allotment money and all the 20,000 shares were issued to the public. The
balance of allotment money was also received in due time. You are asked to give the Journal,
Cash Book, Ledger Accounts and the Balance Sheet of the company.
(Ans: Total of Cash Book: ₹ 1,62,500; Balance Sheet Total: ₹ 1,50,000)
14. Star Cycle Ltd. was registered with a capital of ₹ 5,00,000 divided into 20,000 shares of ₹ 25
each. The company offered to public for subscription 10,000 shares payable ₹ 5 per share on
application, ₹ 5 per share on allotment and the balance in two calls of ₹ 7.50 each. The
company received applications for 11,600 shares. Applications for 1,000 shares were rejected
and application money was refunded to the applicants. A person who applied for 1,000
shares was allotted only 400 shares and excess of his application money was carried forward
towards the payment of allotment and calls. Give Journal entries.
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15. Sun TV Ltd. issued 50,000 shares of ₹ 10 each payable ₹ 3 on 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:
Applicants for 60,000 shares were allotted 30,000 shares.
Applicants for 40,000 shares were allotted 20,000 shares.
Abhay to whom 1,000 shares were allotted from category (i), failed to pay the allotment
money. Pass Journal entries up to allotment.
Issue of Shares for Cash at Premium
16. S Ltd. issued 1,00,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share. The whole
amount was payable on application. The issue was fully subscribed. Pass necessary Journal
entries.
17. X Ltd. invited applications for 11,000 Equity Shares of ₹ 10 each issued at 20% premium.
The whole amount was payable on application. The issue was undersubscribed by 1,000
shares. Pass necessary Journal entries.
18. H Ltd. was registered with a capital of ₹ 8,50,000 divided into 8,500 shares of ₹ 100 each. It
issued 7,000 shares at a premium of ₹ 10 payable as: ₹ 25 on application, ₹ 40 on allotment
(including ₹ 10 premium), and ₹ 45 on first and final call. Applications were received for
9,000 shares. Applicants of 2,000 shares were sent letters of regret and application money
was refunded. All the money due on shares was duly received. Give necessary journal entries
and prepare cashbook.
(Ans: Allotment received: ₹ 2,80,000)
19. A limited company offered for subscription 10,000 shares of ₹ 25 each, payable ₹ 5 per share
on application, ₹ 10 per share on allotment (including ₹ 5 per share as premium), ₹ 5 per
share as first call on the shares and the balance in two equal amounts at intervals of three
months. All the shares were applied for and allotted. All the money was received except the
second call and final call moneys on 200 and 400 shares respectively.
You are asked to show the entries in the company's Journal, Cash Book and the Ledger.
Also show the company's Balance Sheet on completion of the above transactions.
(Ans: Cash Book Balance: ₹ 2,97,000)
20. X Ltd. was incorporated with a capital of ₹ 2,00,000 divided into shares of ₹ 10 each. 2,000
shares were offered to the public and out of these, 1,800 shares were applied for and allotted.
₹ 3 per share (including ₹ 1 premium) was payable on application, ₹ 4 per share (including ₹
1 premium) on allotment, ₹ 2 per share on first call and ₹ 3 per share on final call. All the
money was received. Give necessary Journal entries and the Balance Sheet.
(Ans: Balance Sheet Total: ₹ 21,600)
21. M Ltd. issued 10,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount of share
was payable as ₹ 4 on application, ₹ 4 on allotment (including premium), and balance on first
and final call. Applications for 15,000 shares were received and allotment was made to all
the applicants on pro rata basis. Directors decided to adjust excess application money
towards allotment only. Give journal entries assuming all money due was received.
(Ans: Allotment received: ₹ 20,000)
22. Authorized capital of Suhani Ltd. is ₹ 45,00,000 divided into 30,000 shares of ₹ 150 each.
Out of these company issued 15,000 shares of ₹ 150 each at a premium of ₹ 10 per share. The
amount was payable as ₹ 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 14,000
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shares. All the money was duly received.

Prepare an extract of Balance Sheet of Suhani Ltd. as per Schedule III, Part I of the
Companies Act, 2013 disclosing the above information. Also prepare 'Notes to Accounts' for
the same.
(Ans: Share Capital: ₹ 21,00,000; Reserves and Surplus: ₹ 1,40,000; Cash at Bank: ₹ 22,40,000)
23. A Ltd. issued 20,000 equity shares of ₹ 10 each at a premium of ₹ 1 per share payable as ₹ 3
on application, ₹ 5 on allotment (including premium) and ₹ 3 on final call. The issue was
over-subscribed to the extent of 15,000 shares, and the allotment was done as follows:
Applicants of 5,000 shares were given full allotment.
Other applicants of shares were allotted shares on a pro rata basis. The excess application
money received was to be adjusted allotment only.
All money due were received with the exception of the call money on 400 shares. Pass
necessary journal entries to record the above transactions.
(Ans: Allotment received: ₹ 55,000 and on call: ₹ 58,800)
24. X company issued ₹ 10,00,000 new capital divided into shares of ₹ 100 each at a premium of
₹ 20 per share payable as ₹ 10 per share on application, ₹ 40 per share along with ₹ 10
premium on allotment and ₹ 50 per share along with ₹ 10 premium on final payment. Over-
payments 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 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the
money due on allotment and final call was duly received.
Pass necessary entries in the company's books to record the above transactions.
Calls-in-Arrears and Calls-in-Advance
25. Ghosh Ltd. made the second and final call on its 50,000 Equity Shares @ ₹ 2 per share on 1st
January, 2023. The entire amount was received on 15th January, 2023 except on 100 shares
allotted to Venkat. Pass necessary Journal entries for the call money due and received by
opening Calls-in-Arrears Account.
26. G.M. Ltd. did not receive the first call on 2,700 Equity Share @ ₹ 3 per share which was due
on 1.1.2023. The amount was received on 1.2.2023.
Open calls in arrears account and record the above transactions in the books of the company
on 1.1.2023 and 1.2.2023.
(Ans: Calls in arrears ₹ 8,100)
27. On 1.1.2023 X Ltd. received in advance the first call of ₹ 2 per share on 10,000 equity shares.
The first call was due on 15.2.2023.
Journalize the above transactions and transfer the advance to first call account by opening a
Calls-in-Advance account.
(Ans: Calls–in-advance ₹ 20,000)
28. Bharat Ltd. made the first call of ₹ 2 per share on its 1,00,000 Equity Shares on 1st March,
2023. Ashok, a shareholder, holding 800 shares paid the second and final call amount along
with the first call money. The second and final call amount was ₹ 3 per share. Pass necessary
Journal entries for recording the above using the Calls-in-Advance Account.
29. A Ltd. was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20,000
such shares at a premium of ₹ 2 per share, payable as ₹ 2 per share on application, ₹ 5 per
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share on allotment (including premium) and ₹ 2 per share on first call made three months
later. All the money payable on application and allotment was duly received but when the
first call was made, one shareholder paid the entire balance on his holding of 300 shares and
another shareholder holding 1,000 shares failed to pay the first call money. Give Journal
entries to record the above transactions and show how they will appear in the company's
Balance Sheet.
30. XYZ Ltd. issued 8,000 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 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 1,250 shares paid nothing after first call.
Prepare Journal and the Balance Sheet.
(Ans: Balance Sheet Total: ₹ 37,000)
31. XYZ Ltd. issued 20,000 shares of ₹ 10 each, payable as follows:

On Application ₹ 2.50 (Jan 1, 2023)
On Allotment ₹ 2.50 (April 1, 2023)
On First Call ₹ 2.50 (June 1, 2023)
On Second and Final Call ₹ 2.50 (August 1, 2023)
19,000 shares were applied for and full allotment was made to all of them. Sikander, one of
the shareholders to whom 400 shares were allotted paid the entire balance with allotment
money and another shareholder, Hari, did not pay allotment and first call money on his 600
shares but which he paid with the final call. Calculate interest on calls in advance and calls in
arrears on the basis of provisions of Table ‘F’ of the Companies Act, 2013.
(Ans: Calls in advance: ₹ 2,000 and Calls in Arrear: ₹ 3,000; Interest on Call in advance: ₹ 60 and
interest on Calls in Arrears: ₹ 75)
Issue of Shares for Consideration other than Cash
32. 2,000 Equity Shares of ₹ 10 each were issued to X Limited from whom assets of ₹ 25,000
were acquired. Pass Journal entry.
33. 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 worth ₹ 1,00,000. Pass
entries in company's Journal.
34. N Ltd. purchased furniture costing ₹ 1,59,000 from S Furniture. Payment was made as ₹
59,000 in cash and balance was payable by way of issuing equity shares of ₹ 100 each at par.
Journalize.
35. O Ltd. purchased furniture costing ₹ 1,59,000 from S Furniture. Payment was made as ₹
69,000 in cash and balance was payable by way of issuing equity shares of ₹ 100 each at a
premium of ₹ 20. Journalize.
36. Jain Ltd. purchased machinery costing ₹ 10,00,000 from Ayer Ltd. 50% of the payment was
made by cheque and for the remaining 50%, the company issued Equity Shares of ₹ 100 each
at a premium of 25%. Pass necessary Journal entries in the books of Jain Ltd.
37. Apollo Television Co. Ltd. issued 5,000 Equity shares of ₹ 10 each credited as fully paid-up
to the underwriters for their underwriting services. Pass necessary Journal entries.
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38. Arya Limited issued 900 equity shares of ₹ 100 each as fully paid up in consideration of the
purchase of plant and machinery worth ₹ 99,000. Make entries in company’s journal.
(Ans: Securities premium: ₹ 9,000)
39. A company issued 30,000 fully paid-up shares of ₹ 100 each for purchase of the following
assets and liabilities from Sharma & Co:
Plant ₹ 7,00,000 Stock-in-Trade ₹ 9,00,000
Land and Building ₹12,00,000 Sundry Creditors ₹ 2,00,000
You are required to pass necessary Journal entries.
(Ans: Goodwill: ₹ 4,00,000)
40. Roy Ltd. issued ₹ 4,00,000 fully paid up equity share of ₹ 100 each at par for the purchase of
the following assets and liabilities from Mohan Ltd.
Furniture ₹ 1,50,000 Debtors ₹ 1,60,000
Computer ₹ 80,000 Creditors ₹ 70,000
Pass necessary entries in the books of Roy Ltd.
(Ans: Goodwill: ₹ 80,000)
41. A company purchased a running business from M/s. Rai Brothers for a sum of ₹ 15,00,000
payable ₹ 12,00,000 in fully paid shares of ₹ 10 each and balance through cheque. The assets
and liabilities consisted of the following:
Plant and Machinery ₹ 4,00,000 Stock ₹ 4,00,000
Building ₹ 4,00,000 Cash ₹ 3,00,000
Sundry Debtors ₹ 3,00,000 Sundry Creditors ₹ 2,00,000
You are required to pass necessary Journal entries in the company's books.
(Ans: Capital Reserve: ₹ 1,00,000)
42. 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 balance by a bank
draft. The assets and liabilities consisted of the following:
Plant ₹ 3,50,000; Stock ₹ 4,50,000; Land and Building ₹ 6,00,000; Sundry Creditors ₹
1,00,000.
(Ans: Goodwill: ₹ 2,00,000)
Issue of Shares to Promoters
43. Delhi transport Ltd. issued 1,000 equity shares of ₹ 100 each to its promoters in
consideration of the services rendered by them at par.
(Ans: Dr. Formation Expenses/Goodwill and Cr. Equity Share Capital with ₹ 1,00,000)
44. Bharat Ltd. was formed on 1.4.2023 with an authorized capital of ₹ 40,00,000 divided into
equity shares of ₹ 10 each. The company issued 5,000 shares to its Promoters as the
remuneration of the services rendered by them at par. Company also issued at 10% premium
to Mr. Manoj for the purchase of assets of ₹ 5,50,000 from him. Journalize.
(Ans: Dr. Formation expenses/Goodwill and Cr. Equity Share Capital with ₹ 50,000; 50,000 shares
were issued to Mr. Manoj)
Forfeiture and Reissue of Shares which were Originally Issued at Par
45. Z Ltd. issued 20,000 Equity Shares of ₹ 10 each at par payable: On application ₹ 2 per share;
on allotment ₹ 3 per share; on first call ₹ 3 per share; on second and final call ₹ 2 per share.
Mr. Gupta was allotted 100 shares.
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Pass necessary Journal entry relating to the forfeiture of shares in each of the following
alternative cases:
Case I - If Mr. Gupta failed to pay the allotment money and his shares were forfeited.
Case II - If Mr. Gupta failed to pay allotment money and on his subsequent failure to pay the
first call, his shares were forfeited.
Case III - If Mr. Gupta failed to pay the first call and on his subsequent failure to pay the
second and final call, his shares were forfeited.
46. A, who holds 200 shares of ₹ 100 each, has paid only ₹ 25 per share as application money.
B, who holds 300 shares of ₹ 100 each, has paid ₹ 25 per share on application and ₹ 30 per
share on allotment.
C, who holds 400 shares of ₹ 100 each, has paid ₹ 25 per share on application, ₹ 30 per share
on allotment and ₹ 20 per share on first call.
They failed to pay their arrears and the final call. Their shares were forfeited and re-issued at
₹ 95 per share. Prepare necessary journal entries.
(Ans. Capital Reserve: ₹ 47,000)
47. Narmada Limited was registered with an Authorized Capital of ₹ 5,00,000 in ₹ 10 Shares;
out of which 30,000 shares were issued to the public, payable as follows:
On application & Allotment ₹3
On First Call ₹4
On Second Call ₹3
Govind, holding 100 shares failed to pay the First Call money and his shares were forfeited
after the First Call. Gopal, holding 200 shares failed to pay the second call and his shares
were also forfeited. Pass Journal entries.
(Ans: Share Forfeiture A/c: ₹ 1,700)
48. The directors of a company forfeited 1,000 equity shares of ₹ 10 each (fully called) on which
₹ 4,000 had been paid. 400 of these shares were re-issued upon payment of ₹ 3,000.
Journalize the transactions of forfeiture and re-issue of shares.
(Ans: Capital Reserve: ₹ 600)
49. The Directors of Amtek Ltd. resolved on 1st April, 2023 that 1,000 equity shares of ₹ 10
each, ₹ 8 per share called-up be forfeited for non-payment of first call of ₹ 2 per share. On 1st
February, 600 of these shares were re-issued at ₹ 7 per share fully paid-up.
Journalize the transactions of forfeiture and re-issue of shares.
(Ans: Capital Reserve: ₹ 1,800)
50. Super Star Ltd. makes an issue of 10,000 Equity Shares of ₹ 100 each, payable as:
On Application and Allotment ₹ 50
On First Call ₹ 25
On Second and Final Call ₹ 25
Members holding 400 shares did not pay the second and final call and the shares are duly
forfeited, 200 of which are reissued as fully paid-up @ ₹ 50 per share. Pass Journal entries in
the books of the company.
51. A Limited Company forfeited 100 Equity Shares of the face value of ₹ 10 each, ₹ 6 per share
called-up, for non-payment of first call of ₹ 2 per share. The forfeited shares were
subsequently reissued as fully paid-up @ ₹ 7 each. Give necessary entries in the company's
Journal.
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52. A company issued 10,000 shares of the value of ₹ 10 each, payable ₹ 3 on application, ₹ 3 on
allotment and ₹ 4 on the first and final call. All amounts are duly received except the call
money on 100 shares. These shares are subsequently forfeited by Directors and are resold as
fully paid-up for ₹ 500. Give necessary Journal entries.
53. The Directors of M Ltd. resolved on 1st May, 2023 that 2,000 Equity Shares of ₹ 10 each, ₹
7.50 paid be forfeited for non-payment of final call of ₹ 2.50. On 10th June, 2023, 1,800 of
these shares were reissued for ₹ 6 per share. Give necessary Journal entries.
54. X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the 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.
Journalize the above.
55. S Ltd. with a registered capital of ₹ 5,00,000 in shares of ₹ 10 each, invited applications for
20,000 shares payable as:
On application ₹2
On allotment ₹2
On first call ₹3
On final call ₹3
An applicant who had been allotted 250 shares failed to pay allotment and first call money
due from him. His shares were forfeited. After this, the final call was made and the forfeited
shares were reissued as fully paid-up @ ₹ 8.50 per share.
Pass Journal entries and show the company's Balance Sheet.
(Ans: Capital Reserve: ₹ 125; Balance Sheet Total: ₹ 2,00,125)
56. New Company Ltd. has a nominal capital of ₹ 2,50,000 in shares of ₹ 10. Of these, 8,000
shares were subscribed by the public and during the first year ₹ 5 per share were called-up,
payable ₹ 2 on application, ₹ 1 on allotment, ₹ 1 on first call and ₹ 1 on second call. The
amounts received in respect of these shares were:
On 6,000 shares the full amount called.
On 1,250 shares ₹ 4 per share
On 500 shares ₹ 3 per share
On 250 shares ₹ 2 per share
The Directors forfeited the 750 shares on which less than ₹ 4 had been paid. The shares were
subsequently reissued at ₹ 3 per share. Give Journal entries recording the above transactions.
(Ans: Capital Reserve: ₹ 500; Balance Sheet Total: ₹ 79,250)
57. A holds 100 shares of ₹ 10 each on which he has paid ₹ 1 per share on application. B holds
200 shares of ₹ 10 each on which he has paid ₹ 1 and ₹ 2 per share on application and
allotment respectively. C holds 300 shares of ₹ 10 each and has paid ₹ 1 on application, ₹ 2
on allotment and ₹ 3 on first call.
They all fail to pay their arrears and the second call of ₹ 2 per share. Shares are forfeited and
subsequently reissued @ ₹ 11 per share as fully paid-up. Journalize the above.
58. XYZ Ltd. issued 20,000 shares of ₹ 20 each payable as:

On application ₹4
On allotment ₹4
On first call ₹6
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On second and final call ₹6

All the amounts were received except the following:
A, 500 shares, has not paid allotment, first call and final call.
B, 300 shares, has not paid first call and final call.
C, 200 shares, has not paid final call.
All the above shares were forfeited and were reissued in the following manner:
Shares of A @ ₹ 18 per share, Shares of B @ ₹ 16 per share and Shares of C @ ₹ 15 per share.
Pass Journal entries regarding forfeiture and reissue of shares.
59. X Ltd. issued 10,000 Equity Shares of ₹ 10 each, payable ₹ 3 on application, ₹ 3 on allotment
and the balance on two calls. All the calls were duly made and the amount so realised with
the exception of the following:
(i) Mr. A holding 100 shares did not pay the amount due on first and final call
(ii) Mr. B holding 100 shares did not pay the amount due on final call.
All the shares were forfeited and reissued only 150 shares (all of A and balance of B) to Mr.
D @ ₹ 8 per share. Show the forfeiture and reissue entries.
Forfeiture and Reissue of Shares which were Originally Issued at Premium
60. A share of ₹ 100 issued at a premium of ₹ 10 on which ₹ 80 (including premium) was called
and ₹ 60 (including premium) was paid, has been forfeited. This share was afterwards
reissued as fully paid-up for ₹ 70. Give Journal entries to record the above.
61. A Ltd. forfeited 800 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) for non-payment of a final call of ₹ 2 per share. Out of these, 600 shares were re-
issued as fully paid-up for ₹ 13 per share. Journalize.
62. B Ltd. forfeited 500 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) for non-payment of the first call of ₹ 3 per share and final call of ₹ 2 per share. Out
of these, 300 shares were re-issued as fully paid-up for ₹ 10 per share. Journalize.
63. C Ltd. forfeited 300 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) for non-payment of allotment money of ₹ 4 per share (including premium), first
call of ₹ 3 per share and final call of ₹ 2 per share. Out of these, 200 shares were re-issued as
fully paid-up at a discount of ₹ 3 per share. Journalize.
(Ans: Capital Reserve: Nil)
64. X Ltd. forfeited 800 shares of ₹ 20 each issued at a premium of ₹ 2 per share to Mahesh (₹ 18
called-up) on which he did not pay first call of ₹ 4. Of these, 300 shares were re-issued @ ₹ 15
per share as ₹ 18 paid-up. Journalize.
65. Y Ltd. forfeited 100 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) on which first call money of ₹ 3 was not received; the final call money of ₹ 2 is not
yet called. These shares were subsequently re-issued at ₹ 7 per share as ₹ 8 paid-up.
Journalize.
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66. Y Ltd, forfeited 2,000 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) on which allotment money of ₹ 4 (including premium) and first call money of ₹ 3
was not received; the final call money of ₹ 2 is not yet called. 1,500 of these shares were re-
issued as fully paid for ₹ 7 per share. Journalize.
(Ans: Capital Reserve: Nil)
67. 500 shares of ₹ 10 each, issued at a premium of ₹ 1 on which ₹ 8 (including premium) was
called and ₹ 6 (including premium) was paid, have been forfeited. 400 of these shares were
re-issued as fully paid for ₹ 7 each. Journalize.
68. The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per
share, for the non-payment of the first call money of ₹ 2 per share. The final call of ₹ 2 per
share has not been made. Half of the forfeited shares were reissued at ₹ 1,500 as fully paid-
up. Record the Journal entries for the forfeiture and reissue of shares.
69. A Ltd. has authorized capital of ₹ 2,00,000, divided into shares of ₹ 20 each, the whole of
which is issued and subscribed at a premium of ₹ 2 per share. The amount was payable as:
On application and allotment ₹ 12 per share (including premium) and on first call ₹ 2 per
share, the balance as and when required.
The application and allotment money (including premium) was duly received but a
shareholder holding 500 shares failed to pay the first call and his shares were forfeited. They
were later reissued for ₹ 16 per share as fully paid-up. Give Journal entries for the above.
70. Commerce Publications Ltd. issued 50,000 Equity Shares of ₹ 10 each at a premium of 10%
payable as: On application ₹ 2, on allotment ₹5, on first call ₹ 2, on final call ₹ 2.
The whole of the issue was called for by the company and all the money was duly received
except the allotment and call money on 500 shares. These shares were, therefore, forfeited
and later on reissued @ ₹ 9 per share as fully paid-up. Pass necessary Journal entries to
record the above transactions.
71. JCB Ltd. has an authorized capital of ₹ 4,00,000 divided into shares of ₹ 20 each, the whole
of which is issued and subscribed at a premium of ₹ 2 per share.
The amount was payable as: On application and allotment ₹ 10 per share, on first call ₹ 4 per
share (including premium) and the balance as and when required. The company made both
the calls. The application and allotment money were duly received. But a shareholder
holding 2,000 shares failed to pay both the calls and his shares were forfeited. They were
later reissued @ ₹ 14 per share as fully paid-up. Give Journal entries.
72. Reliance 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 sums were duly received except the following:
(i) A, a holder of 100 shares did not pay allotment and call money.
(ii) B, a holder of 200 shares did not pay call money.
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The company forfeited the shares of A and B. Subsequently, the forfeited shares were
reissued for ₹ 70 per share as fully paid-up.
Show entries for the above transactions in the Cash Book and Journal of the company.
(Ans: Capital Reserve: ₹ 4,000; Balance of Cash Book: ₹ 48,02,000)
73. TATA 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 X who failed to pay the Allotment and First and Final call
money and on 2,000 shares of Y who did not pay the First and Final call.
Shares of X and Y were forfeited. Out of the forfeited shares, 4,000 shares were reissued,
including all the shares of Y at ₹ 17 per share as fully paid-up.
Pass necessary Journal entries in the books of TATA Ltd. for the above transactions.
(Ans: Amount Forfeited: ₹ 16,000; Capital Reserve: ₹ 14,000; Money Received on Allotment: ₹
2,88,000)
Forfeiture and Reissue of Shares which were Allotted on Pro Rata
74. 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
immediately forfeited. Afterwards the second call was made. The amount due on second call
was also received except on 1,000 shares, applied by Monika. Her shares were also forfeited.
All the forfeited shares were reissued to Mohit for ₹ 9,000 as fully paid-up.
Pass necessary Journal entries in the Books of Alfa Ltd. for the above transactions.
75. Tata Ltd. having an authorized capital of ₹ 20,00,000 in shares of ₹ 100 each invited
application for 10,000 shares payable as:
On application ₹ 20
On allotment ₹ 30
On first call ₹ 25
On second and final call ₹ 25
The company received applications for 12,000 shares. Applications for 10,000 shares were
accepted in full and the money on the applications rejected was returned.
All money due as stated above was received with the exception of the second and final call
on 250 shares. These shares were forfeited and half of these shares were reissued as fully
paid-up at ₹ 90 per share. Pass necessary Journal entries and prepare the extract of Balance
Sheet.
(Ans: Capital Reserve: ₹ 8,125; Balance Sheet Total: ₹ 10,05,000)
76. Swaraj & Co. was registered with an authorized capital of ₹ 5,00,000 divided into 50,000
shares of ₹ 10 each. The company offered 30,000 of these shares to the public, which were
payable ₹ 2 per share on application, ₹ 4 per share on allotment and the balance three
months later. Applications for 46,000 shares were received on which the Directors allotted
CA Manish Mahajan
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shares as:
Applications for 20,000 shares Full
Applications for 25,000 shares 40%
Applications for 1,000 shares Nil
₹ 86,000 was realized on account of allotment money (excluding the amount carried from
application money) and ₹ 1,00,000 on account of call. The Directors decided to forfeit those
shares on which allotment money was overdue. Show Journal entries in the company's
books.
(Ans: Forfeited Shares A/c: ₹ 2,000)
77. H Limited issued a prospectus inviting applications for 20,000 shares of ₹ 10 each at a
premium of ₹ 2 per share payable as follows:
On application ₹ 2; on allotment ₹ 5 (Inc. Premium); on first call ₹ 3; on 2nd & final call ₹ 2.
Applications were received for 30,000 shares and pro rata allotment was made on the
applications for 24,000 shares. Money overpaid on applications was adjusted against amount
due on allotment.
Ramesh, to whom 400 shares were allotted, failed to pay the allotment money and on his
subsequent failure to pay first call his shares were forfeited. Mohan, the holder of 600 shares,
failed to pay two calls and his shares were forfeited after the second call.
Of the shares forfeited, 800 shares were sold to Krishna credited as fully paid-up for ₹ 9 per
share, the whole of Ramesh's shares being included. Pass Journal entries & show the Balance
Sheet.
(Ans: Capital Reserve: ₹ 2,160; Balance Sheet Total: ₹ 2,40,360)
78. 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 follow:
On Application—₹ 30 per share
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.
(Ans: Capital Reserve: ₹ 14,000; Balance of Cash Book: ₹ 96,10,000)
79. D Ltd. offered to the public 20,000 Equity Shares of ₹ 10 each payable ₹ 4 on application, ₹ 2
on allotment, ₹ 2 on first call and the balance on final call. Applications received for 35,000
shares. Applications for 10,000 shares were rejected. Those totaling 15,000 shares were
allotted 10,000 shares and the remaining applications were accepted in full. Excess
application money was utilized towards the money due on allotment. Both the calls were
made.
One shareholder holding 500 shares failed to pay the two calls and as a consequence his
shares were forfeited. 200 of these shares were reissued as fully paid-up for as ₹ 6 per share.
Record the above in the company's Journal and Cash Book and prepare the Balance Sheet.
80. Veer Ltd. invited applications for issuing 1,00,000 Equity Shares of ₹ 500 each at a premium
of ₹ 100 per share. The amount was payable as:
On application ₹ 200 per share
CA Manish Mahajan
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On allotment ₹ 300 per share (including premium)

On first and final call balance of the amount
Applications for 2,00,000 shares were received. Applications for 50,000 shares were rejected
and the application money was refunded. Pro rata allotment was made to the remaining
applicants. Amount overpaid with application was adjusted towards sums due on allotment.
All calls were made and were duly received except the first and final call on 100 shares
allotted to Vasu. These shares were forfeited. The forfeited shares were reissued to Ravi for ₹
60,000 as fully paid-up.
Pass necessary Journal entries in the books of the company for the above transactions.
(Ans: Amount forfeited: ₹ 40,000; Capital Reserve: ₹ 40,000)
81. VSNL Ltd. invited applications for issuing 50,000 Equity Shares of ₹10 each. The amount
was payable as follows:
On allotment ₹ 5 per share
On first and final call the balance
Applications for 70,000 shares were received. Allotment was made to all applicants on pro-
rata basis. Excess 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 the allotment money his shares were forfeited. Afterwards, the first and
final call was made. Amar, 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.
(Ans: Amount due but not received from Ramesh on allotment: ₹ 1,900; Allotment money received later
on: ₹ 1,88,100; Capital Reserve: ₹ 3,500)
82. XYZ Ltd. has been registered with an authorized capital of ₹ 2,00,000 divided into 2,000
shares of ₹ 100 each of which, 1,000 shares were offered for public subscription at a premium
of ₹ 5 per share, payable as:
On application ₹ 10
On allotment ₹ 25 (including premium)
On first call ₹40
On final call ₹30
Applications were received for 1,800 shares, of which applications for 300 shares were
rejected outright; the rest of the applications were allotted 1,000 shares on pro rata basis.
Excess application money was transferred to allotment.
All the money was duly received except from Sundar, holder of 100 shares, who failed to pay
allotment and first call money. His shares were later forfeited and reissued to Shyam at ₹ 60
per share ₹ 70 paid up. Final call has not been made.
Pass necessary Journal entries and prepare Cash Book in the books of XYZ Limited.
83. A company issued for public subscription 50,000 Equity Shares of ₹ 10 each at a premium of
₹ 2 per share, payable as under:
On first call ₹ 2 per share
On final call ₹ 3 per share
Applications were received for 75,000 Equity Shares. The shares were allotted on pro rata
basis to the applicants for 60,000 shares, the remaining applications being rejected. Money
overpaid on applications was utilized towards sum due on allotment.
CA Manish Mahajan
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A, to whom 2,000 shares were allotted, failed to pay allotment and calls money and B, to
whom 2,500 shares were allotted, failed to pay the two calls. These shares were,
subsequently, forfeited after the final call was made. All the forfeited shares were reissued to
X as fully paid-up @ ₹ 8 per share.
Pass Journal entries to record the above transactions.
84. Applications were invited by the Directors of X Ltd. for 15,000 of its Equity Shares of ₹ 100
and at ₹ 115 per share payable as:
On application -1st April, 2023 - (including premium of ₹ 15 per share) ₹ 75;
On allotment - 30th April, 2023- ₹ 20 and
On first and final call - 31st May, 2023- ₹ 20
Applications were received for 18,000 shares and it was decided to deal with these as:
a) to refuse allotment to applicants for 800 shares,
b) to give full allotment to applicants for 2,200 shares,
c) to allot the remainder of the available shares on pro rata basis among the other applicants
and
d) to utilize the surplus received on applications in part payment of amounts due on
allotment.
An applicant, to whom 400 shares had been allotted, failed to pay the amount due on the
first and final call and his shares were declared forfeited on 31st July, 2023. These shares
were reissued on 3rd September, 2023, as fully paid-up @ ₹ 90 per share.
Pass Journal entries to record the above issue of shares.
(Ans: Capital Reserve: ₹ 28,000; Money adjusted with allotment: ₹ 1,65,000)
85. X Ltd. issued a prospectus inviting applications for 50,000 Equity Shares of ₹ 10 each,
payable ₹ 5 as per application (including ₹ 2 as premium), ₹ 4 as per allotment and the
balance towards first and final call.
Applications were received for 65,000 shares. Application money received on 5,000 shares
was refunded with letter of regret and allotments were made on pro rata basis to the
applicants of 60,000 shares. Money overpaid on applications including premium was
adjusted on account of sums due on allotment. Mr. Sharma 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 sold to Mr. Jain credited as fully paid-up for ₹ 9
per share.
Pass Journal entries and show the relevant entries in the Cash Book.
86. Bharat Tyres Ltd. invited applications for 1,00,000 Equity Shares of ₹ 10 each issued at a
premium of ₹ 4 per share. The amount was payable as:
On application — ₹ 6 (including premium ₹ 2)
On allotment — ₹ 6 (including premium ₹ 2)
Balance on first and final call
Applications for 1,50,000 shares were received. Allotment was made to all the applicants on
pro rata basis.
Subodh, to whom 200 shares were allotted, failed to pay allotment and call money. Vikram,
to whom 100 shares were allotted, failed to pay the call money. Their shares were forfeited
and afterwards reissued @ ₹ 8 per share as fully paid-up. Pass necessary Journal entries.
87. XYZ Ltd. invited applications for issuing 50,000 Equity Shares of ₹ 10 each. The amount
was payable ₹ as:
CA Manish Mahajan
P a g e | 29

On first and final call ₹ 3 per share
Applications were received for 75,000 shares and pro rata allotment was made as:
Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis.
Applicants for 35,000 shares were allotted 20,000 shares on pro rata basis.
Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed
to pay the allotment money. His shares were forfeited immediately after allotment.
Shamu, who had applied for 700 shares out of the group applying for 35,000 shares, failed to
pay the first and final call. His shares were also forfeited.
Out of the forfeited shares, 1,000 shares were reissued @ ₹ 8 per share as fully paid-up. The
reissued shares included all the forfeited shares of Shamu.
Pass necessary Journal entries to record the above transactions.
(Ans: Money Received on Allotment: ₹ 1,21,400; Capital Reserve: ₹ 3,200)
88. A company issued for public subscription 40,000 Equity Shares of ₹ 10 each at a premium of
₹ 2 per share payable as:
On allotment ₹ 5 per share (including premium)
On first call ₹ 2 per share
On second call ₹ 3 per share
Applications were received for 60,000 shares. Allotment was made on pro rata basis to the
applicants for 48,000 shares, the remaining applications being refused. Money overpaid on
application was utilized towards sums due on allotment. Ram to whom 1,600 shares were
allotted failed to pay the allotment money and Shyam to whom 2,000 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 reissued as fully paid-up @ ₹ 8 per share.
Give necessary Journal entries for the above transactions.
89. Sintex Ltd. issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a
premium of ₹ 2 per share, payable as:
On application ₹ 3 (including ₹ 1 premium)
On allotment ₹ 4 (including ₹ 1 premium)
On first call ₹3
On second and final call ₹2
applications for 2,400 shares. It was decided to utilize excess application money towards the
amount due on allotment. Rahul, to whom 40 shares were allotted, failed to pay the
allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Rajesh, who applied for 72 shares failed to pay the two calls and, on such failure, his shares
were forfeited. Of the shares forfeited, 80 shares were sold to Krishan credited as fully paid-
up for ₹ 9 per share, the whole of Rahul's shares being included. Give Journal entries to
record the above transactions (including cash transactions).
90. Bharat Ltd. invited applications for issuing 2,00,000 Equity Shares of ₹ 10 each. The amount
was payable as: On application ₹ 3 per share, on allotment ₹ 5 per share and on first and final
call ₹ 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was
made to all the applications on the following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis.
CA Manish Mahajan
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Bajaj, who was allotted 3,000 shares out of 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 reissued as fully paid-up @ ₹ 8 per share. The reissued shares included all the forfeited
shares of Bajaj. Give necessary Journal entries to record the above transactions.
91. The Directors of Super Star Ltd. invited applications for 2,00,000 Equity Shares of ₹ 10 each
to be issued at 20% premium. The money payable per shares was: on application ₹ 5, on
allotment ₹ 4 (including premium of ₹ 2), first call ₹ 2 and final call ₹ 1.
Applications were received for 2,40,000 shares and allotment was made as:
a) to applicants for 1,00,000 shares—in full,
b) to applicants for 80,000 shares—60,000 shares,
c) to applicants for 60,000 shares—40,000 shares.
Applicants of 1,000 shares falling in Category (a) and applicants of 1,200 shares falling in
Category (b) failed to pay allotment money. These shares were forfeited on failure to pay first
call. Holders of 1,200 shares falling in Category (c) failed to pay the first and final call and
these shares were forfeited after final call.
1,300 shares [1,000 of Category (a) and 300 of Category (b)] were reissued at ₹ 8 per share as
fully paid-up. Journalize the above transactions and prepare Cash Book and Balance Sheet.
(Ans: Amount forfeited: ₹ 11,000 (for Categories i and ii) + ₹ 8,400 (Category iii) = ₹ 19,400; Capital
Reserve: ₹ 4,400; Actual amount received on allotment: ₹ 5,93,900; Securities Premium Reserve: ₹
3,96,200; Paid-up capital: ₹ 19,94,400; Balance Sheet Total: ₹ 23,95,000)
92. XYZ Ltd. issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a
premium of ₹ 4 per share, payable as:
On application ₹ 6 (including ₹ 1 premium)
On allotment ₹ 2 (including ₹ 1 premium)
On first call ₹ 3 (including ₹ 1 premium)
On second and final call ₹ 3 (including ₹ 1 premium)
amount due on allotment. X, to whom 40 shares were allotted, failed to pay the allotment
money and on his subsequent failure to pay the first call, his shares were forfeited.
Y, who applied for 72 shares failed to pay the two calls and on his such failure, his shares
were forfeited.
Of the shares forfeited, 80 shares were sold to Z credited as fully paid-up for ₹ 9 per share, the
whole of Y’s shares being included. Prepare Journal, Cash Book and the Balance Sheet.
(Ans: Capital Reserve: ₹ 400; Balance Sheet Total: ₹ 28,088)
93. Ganesh Ltd. issued a prospectus inviting applications for 20,000 shares of ₹ 10 each at a
premium of ₹ 4 per share, payable as follows:
On Application ₹ 4 (including premium 1)
On Allotment ₹ 3 (including premium 1)
On First Call ₹ 3 (including premium 1)
On Second and Final Call ₹ 4 (including premium 1)
Applications were received for 30,000 shares and pro-rata allotment was made or the
sums due on allotment.
X, who was allotted 500 shares, failed to pay the allotment money and on his subsequent
failure to pay the first call, his shares were forfeited.
CA Manish Mahajan
P a g e | 31
Y, who applied for 1,800 shares, failed to pay the two calls and his shares were forfeited after
the second call.
Of the shares forfeited, 1,700 shares were re-issued as fully paid up for ₹ 8 per share, the
whole of Y's shares being included. Prepare Cash Book, Journal and Balance Sheet.
(Ans: Bank Balance: ₹ 2,78,500; Amount received on allotment: ₹ 42,900; Share Forfeiture A/c: ₹
1,140; Capital Reserve: ₹ 4,860; Securities Premium A/c: ₹ 75,500)
Employee Stock Option Plan (ESOP)
94. ABC Ltd. has 100 employees. On 1st April, 2020, the company entered into an agreement
with the employees whereby each employee was granted 100 options subject to their
completing 3 years of continuous service. The fair value of the share as on 1st April, 2020
was ₹ 100 and it was agreed that it shall be offered at ₹ 70. It was also agreed that an
employee could exercise the option within three months of meeting the terms of the
agreement. You are to determine the following:
(a) Grant Date; (b) Vesting Period; (c) Vesting Date;
(d) Exercise Period; (e) Exercise Date; (f) Exercise Price;
(g) Value of Option.
(Ans: (a) 1st April, 2020; (b) 3 years from 1st April, 2020 (c) 31st March, 2023; (d) Three Months from
31st March, 2023; (e) 30th June, 2023; (f) ₹ 70; (g) ₹ 30)
95. DEF Ltd has 200 employees. On 1st April, 2020 the company entered into an agreement
with employees and agreed to grant 50 options each on the condition that they complete 3
years of continuous service. Naresh joined the company on 1st July, 2020. Determine
whether he will be eligible to exercise option on 31st March, 2023. Give reasons.
(Ans: No, because he has not completed 3 years of service)
96. XYZ Ltd. has 300 employees. The company entered into an agreement with its employees
on 1st April, 2021 and granted options to subscribe 75 options each on completion of 3 years
of service. Ashish resigned from the company on 30th September, 2023. Will he be eligible to
subscribe the options? Give reason.
(Ans: No, because he did not complete 3 years of service)
97. ABC Ltd. granted options to its 200 employees to subscribe 200 equity shares of ₹ 10 each
after 4 years from the grant date. Fair (Market) value of each share is ₹ 110 whereas the offer
price (exercise price) is ₹ 80. All the 200 employees exercised the option paying ₹ 80 per
share by the exercise date. Pass necessary Journal entries.
98. XYZ Ltd. granted options to its 300 employees to subscribe 300 equity shares of ₹ 10 each
after 3 years from the grant date. Fair (Market) value of each share is ₹ 25 and the offer
(exercise) price is ₹ 15. All the employees except 50 exercised the option by the exercise date.
Pass necessary Journal entries.
99. A Company has its share capital divided into shares of ₹ 10 each. On 1st April, 2021 it
granted 10,000 employees stock options at ₹ 40, when the market price was ₹ 130. The
options were to be exercised between 16th December 2022 and 15th March 2023. The
employees exercised their options for 9500 shares only; the remaining options lapsed. The
company closes its books on 31st March every year. Pass necessary Journal entries.
100. ABC Ltd grants 1,000 employees stock options on 01.04.2020 at ₹ 40, when the market price
is ₹ 160. The vesting period is 2.5 years and the maximum exercise period is one year. 300
unvested options lapse on 01.05.2022. 600 options are exercised on 30.6.2023. 100 vested
options lapse at the end of exercise period. The company closes its books on 31st March every
year. Pass necessary Journal entries.
CA Manish Mahajan

E-notes 07 _ Notes (Company Accounts - Share Capital)

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CHAPTER-7 Company Accounts - Share Capital

Share Capital of a Company

Issued Capital Unissued Capital

Subscribed Capital Unsubscribed Capital

Called Up Capital Uncalled Capital

Paid Up Capital Calls in Arrear Unreserved Capital Reserved Capital

Types/Classes of Share Capital:

Stages of Issue and Allotment of Shares

Share Issue Price

Shares of a company are issued either at par, at a premium.

Market response to invitation of share issue

a. Pro-rata allotment to all

Issue of shares (At a Glance)

At Par At Premium Purchase of Asset Business Purchase

Full Subscription Over Subscription Under Subscription

Reissue of Shares Shares held in Forfeiture and not yet reissued

At Par At Premium At Discount

Calls in arrear and calls in advance

Issue of shares at Premium (Section 52)

Issue of shares at Discount (Section 53, 54)

a) The issue is authorized by a special resolution passed by the company.

I. Issue of shares at Par (Situation of Full subscription)

a. At the time of Application

Bank A/c Dr.

b. On Allotment (transfer of application money to capital)

Share Application A/c Dr.

c. On Allotment money due

Share Allotment A/c Dr.

Bank A/c Dr.

e. On making amount due on 1st call

Share 1st Call A/c Dr.

f. On receipt of call money

Bank A/c Dr.

g. On making amount due on 2nd & Final call

Share 2nd & Final Call A/c Dr.

h. On receipt of call money

Bank A/c Dr.

II. Issue of shares at Premium (Situation of Full subscription)

a. At the time of Application

Bank A/c Dr.

b. On Allotment (transfer of application money to capital)

Share Application A/c Dr.

c. On Allotment money due

Share Allotment A/c Dr.

d. On receipt of allotment money

Bank A/c Dr.

e. On making amount due on 1st call

Share 1st Call A/c Dr.

f. On receipt of call money

Bank A/c Dr.

g. On making amount due on 2nd & Final call

Share 2nd & Final Call A/c Dr.

h. On receipt of call money

Bank A/c Dr.

III. Issue of shares at Par/Premium (Situation of under subscription)

IV. Issue of shares at Par/Premium (Situation of Over subscription)

a. At the time of Application

Bank A/c Dr.