NCERT Solutions for Class 12 Accountancy (Part 2) Chapter 1 Accounting for Share Capital

NCERT
SOLUTIONS
CLASS - 12th

aglase .co

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Class : 12th
Subject : Accountancy
Chapter : 1
Chapter Name : Accounting for Share capital

Q1 What is public company?

Answer. A public company is the company which offers its shares, debentures or other
securities to the general public for subscription to its capital. In the companies Act, 2013, a
public company is defined as the company which isn't a private company.
A public company must have a minimum paid up capital of Rs 5,00,000 or such higher amount,
as may be prescribed from time to time. A private company which is a subsidiary of a company
which isn't a private company, is deemed to be a public company under this law. A public
company is listed on a stock exchange.

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Q2 What is private limited company?

Answer. Private limited company is a company that is limited by shares or by guarantee given
by its members. A private limited company is defined as a company which restricts the right of
its members to transfer their shares. It cannot trade its securities publicly on any stock
exchange.
There must be atleast two and a maximum of 200 members (excluding current and former
employees) to form a private company. It cannot invite application from the general public to
subscribe its securities (shares or debentures). Rather it raises its capital privately from its own
sources. For example, Coca-Cola India Private limited, etc.

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Q3 When can shares be Forfeited?

Answer. Sometimes, it may happen that a shareholder fails to pay his allotment money or
subsequent call money. In this case, he is notified by the company to pay the money due. But if
he don't pay the due money even after getting notified, then his shares are forfeited by the

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company.

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Q4 What is meant by Calls-in-Arrears?

Answer. When shareholder fails to pay all the instalments in due time, then company expects
the shareholder to pay the outstanding amount in the later stages (or calls). Such amount of
money that is being paid at the later stages is termed as Calls-in-Arrears.

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Q5 What do you mean by a listed company?

Answer. When the shares of a public company are listed on a recognised stock exchange for
subscription by the general public, then that company is known as listed company. Like Tata
Motors, Reliance, etc. These companies are also called Quota Companies. Since on the stock
exchanges, the prices of the securities increase or decrease on the basis of demand and supply
of the securities, hence the shareholder can determine the instant goodwill of the company and
take various investment decisions.

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Q6 What are the uses of securities premium?

Answer. Securities premium reserve of the company can be used only for certain purposes
which are as under -
→ For issuing fully paid bonus shares to its members
→ For writing off the preliminary expenses of the company,
→ For writing off the expenses on the issue of shares or debentures of the company,
→ For writing off the discount on issue of debentures.
→ For paying up the premium on the redemption of shares or debentures.
→ Buy-back of its own shares in the open market

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Q7 What is meant by Calls-in-Advance?

Answer. Sometimes a shareholder may pay the amount unpaid on his shares before the due
date or before being called by the company. In such a case, the amount paid before the due
date is a liability for the company.
So, the amount of money that is being paid in advance at the earlier stages is termed as Calls-
in-Advance.

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Q8 Write a brief note on ‘Minimum Subscription’.

Answer. Minimum subscription is the amount of shares which must be applied for by the public
in order to be able to issue the shares to the public. If this amount isn't received by the
company, then the company cannot issue shares to the public and the whole amount is paid
back by the company to the Shareholders. The Minimum Subscription of share cannot be less
than 90% of the issued amount.

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Q1 What is meant by the word ‘Company’? Describe its characteristics.

Answer. Under the Companies Act, 2013, a company is an organisation which is registered
under this Act or under any previous law that was formed and registered under this Act or any
other company law.
A company is a voluntary association of person who have come together to do a legal business.
It is formed with the motive to earn profits. It is an artificial person which comes into existence
by the law. Generally, the capital of a company is divided into small parts known as shares.
These shares can be transferred with or without any restrictions depending upon the type of the
company. There are two types of company, public company and private company.
Characteristics of Company
1. Association of Person: A company is formed by the voluntary association of persons who
come together to earn profits. Minimum number of members required to form a private
company is two while it is three in case of a public company.
2. Artificial Person: A company is created by a legal process and exists only in papers. It is

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an artificial person created by law and can be dissolved only through a legal process.
3. Separate Legal Entity: A company has a separate legal entity distinct from its members
(shareholders) and directors. It can perform its operations like that of signing documents
or opening bank account in its own name.
4. Limited Liability: The liability of the members of a company is limited up to the extent of
nominal or the face value of the shares. The shareholders are only liable to pay the
unpaid amount of the shares held by them.
5. Perpetual Existence: The existence of company is not affected by the death, retirement,
and insolvency of its members. It can only come to an end by a legal process known as
winding up of company.
6. Common Seal: Since the Company is an artificial person and has no physical existence;
hence it cannot put its signature like natural humans. Thus the company puts its
signature through its common seal which is used by the official authorities who have the
authority to act on behalf of the company.
7. Transferability of Shares: The shares of public limited company are easily and freely
transferable without any consent from other members. But the shares of a private
company are transferable with certain restrictions.

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Q2 Explain in brief the main categories in which the share capital of a company is divided.

Answer. The division of the share capital of a company into main categories is explained below.
→ Authorised Capital: The maximum amount which the company can raise through various
sources is known as its authorised capital. At no point of time, the issued capital can be
more than authorised capital. It is specified in the Memorandum of Association.
→ Issued Capital: Generally a company don't offer its entire authorised capital for
subscription by the public. That part of authorised capital which is offered by the
company for subscription to the general public is known as issued capital.
→ Unissued Capital: That part of authorised capital which isn't offered by the company for
subscription to the general public is known as issued capital.
→ Subscribed Capital: That part of issued capital which is actually subscribed by the public
is known as subscribed capital. For example, a company may issue shares worth ₹
500000 and it is divided into
→ Unsubscribed Capital: It is that part of the issued capital that is not subscribed by the
public. For example, in the above example, 500 shares were left unsubscribed, making
an unsubscribed share capital of Rs 5,000.
→ Called up Capital: It is that part of subscribed capital that is called up by the company
from the shareholders of a company to pay. For example, if the Directors call up Rs 6 out
of Rs 10 (i.e. the face value of the share) from the shareholders of 10,000 to pay, then
Rs 60,000 is regarded as called up share capital.
→ Uncalled up Capital: It is that part of subscribed capital which is not called up till now but
can be called up in future as per the need of the company. For example, in the above
example, Rs 4 were left uncalled from shareholders holding 10,000 shares, so Rs
40,000 is uncalled up share capital.

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→ Paid up capital: It is that part of called up share capital which is actually
received by the company from the shareholders. If the entire called up money
of Rs 4 on 1,000 shares has been received except from a shareholder holding
300 shares, then the paid up share capital is Rs 2,800 (Rs 4,000 − Rs 1,200).
The amount of Rs 1,200 is called Call in Arrears that has been called up but is
unpaid.
→ Reserve Capital: A limited company may call up any portion of uncalled share capital in
the event of winding up of the company to pay its creditors. This amount of uncalled
share capital cannot be used for any other purpose and is reserved for paying back the
creditors, that is why, such portion of share capital is called reserve capital.

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Q3 What do you mean by the term ‘share’? Discuss the type of shares, which can be issued
under the Companies Act, 1956 as amended to date.

Answer. The total capital of a company is divided into equal units of small denomination termed
as shares. The ownership of these shares is easily transferable, from one person to other,
subject to certain conditions. The person who is contributing in the capital in the form of shares
is known as shareholder. The ownership of a shareholder is limited to the value of the shares
held by him/her.
Types of Shares
As per the Section 86 of the Company Act of 1956, there are two types of shares- Preference
Shares and Equity Shares (also known as Ordinary Shares)
i) Preference Shares: Section 85 of the Company Act,1956 defines Preference Shares to be
featured by the following rights:
→ Preference Shares entitle its holder the right to receive dividend at a fixed rate or fixed
amount.
→ Preference Shares entitle its holder the preferential right to receive repayment of capital
invested by them before their equity counterparts at the time of winding up of the
company.
ii) Equity Shares: Equity Shareholders have a voting right and control the affairs of a company.
As per Section 85 (2) of Companies Act 1956; equity share is a share that is not a preference
share. It does not possess any preferential right of payment of dividend or repayment of capital.
The rate of dividend is not fixed on equity shares and varies from year to year, depending upon
the amount of profit available for distribution after paying dividend to the preference
shareholders.

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Q4 Discuss the process for the allotment of shares of a company in case of over subscription.

Answer. When the total number of applications received for shares exceeds the number of
shares offered by the company to the public, the situation of oversubscription arises. A company
can opt for any of the three alternatives to allot shares in case of oversubscription of shares.
i) Excess applications are refused and money received on excess applications is returned to
the applicants.
The company can refuse excess applications and the money received on these excess
applications is returned to the applicants.
Share Application A/c Dr.
To Share Capital A/c
To Bank A/c
(Excess application money returned)
Example: Shares issued 10,000 @ Rs 10 per share and money received for 12,000 shares.
Amount is payable Rs 2 on application, Rs 5 on allotment, Rs 3 on first and final call.
Bank A/c Dr. 24,000
To Share Application A/c 24,000
(Application money received for 12,000 shares)
Share Application A/c Dr. 24,000
To Share Capital A/c 20,000
To Bank A/c 4,000
(Application money transferred to Share Capital
Account and the excess money returned)

ii) Pro rata Basis
The company can allot shares on pro rata basis to all the share applicants. The excess amount
received in the application is adjusted on the allotment.
Share Application A/c Dr.
To Share Capital A/c
To Share Allotment A/c
(Adjustment of application money on allotment)
Example: Shares issued 10,000 @ Rs 10 per share and money received for 12,000 shares.

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Amount is payable Rs 2 on application, Rs 5 on allotment, Rs 3 on first and final call.
Bank A/c Dr. 24,000
To Share Application A/c 24,000
(Application money received for 12,000 shares)
Share Application A/c Dr. 24,000
To Share Capital A/c 20,000
To Share Allotment A/c 4,000
(Application money transferred to Share Capital
Account and the balance amount is transferred to
Share Allotment Account)
Share Allotment A/c Dr. 50,000
To Share Capital A/c 50,000
(Amount due on allotment of 10,000 shares @ Rs 5
per share)
Bank A/c Dr. 46,000
To Share Allotment 46,000
(Allotment money received, Rs 50,000 – Rs 4,000)

iii) Pro rata and refund of money
In this case, the company follows a combination of both the method. It may reject some share
applications and may allot some applications on the pro rata basis.

Share Application A/c Dr.
To Share Capital A/c
To Share Allotment A/c
To Bank A/c
(Application money transferred to Share Capital
Account and the balance amount is transferred to
Share Allotment Account and the excess
application
money is refund)

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Example: Shares issued 10,000 @ Rs 10 per share and money received for 13,000 shares.
Amount is payable Rs 2 on application, Rs 5 on allotment, Rs 3 on first and final call. If the
company rejects the applications for 1,000 shares and allots the remaining on the pro rata
basis.
Bank A/c Dr. 26,000
To Share Application A/c 26,000
(Application money received for 12,000 shares)
Share Application A/c Dr. 26,000
To Share Capital A/c (10,000 × Rs 2) 20,000
To Share Allotment A/c (2,000 × Rs 2) 4,000
To Bank A/c (1,000 × Rs 2) 2,000
(Amount received on share application adjusted to
Share Capital and share allotment and balance is
refunded)
Share Allotment A/c Dr. 50,000
To Share Capital A/c 50,000
(Amount due on share allotment of 10,000 share @
Rs 5 per share)
Bank A/c Dr. 46,000
To Share Allotment A/c 46,000
(Allotment money received, Rs 50,000 – Rs 4,000)

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Q5 What is a ‘Preference Share’? Describe the different types of preference shares.

Answer. Preference Shares: Section 85 of the Company Act,1956 defines Preference Shares to
be featured by the following rights:
→ Preference Shares entitle its holder the right to receive dividend at a fixed rate or fixed
amount.
→ Preference Shares entitle its holder the preferential right to receive repayment of capital
invested by them before their equity counterparts at the time of winding up of the
company.

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Types of Preference Shares
The different types of Preference Shares are diagrammatically explained below.

→ On the basis of Dividend:
a) Cumulative Preference Shares
When a preference shareholder has a right to recover any arrears of dividend, before any
dividend is paid to the equity shareholders, then the type of Preference Shares held by the
shareholder is known as Cumulative Preference Shares. All Preference Shares are cumulative
unless otherwise expressly stated to be non cumulative.
b) Non Cumulative Preference Share
When a preference shareholder receives dividend only in case of profit and is not entitled any
right to recover the arrears of dividend, then the type of Preference Shares held by the
shareholder is known as Non Cumulative Preference Shares.
→ On the basis of Participation:
a) Participating Preference Share
When a preference shareholder enjoys the right to participate in the surplus profit (in addition to
the fixed rate of dividend) that is left after the payment of dividend to the equity shareholders,
the type of shares held by the shareholder is known as Participating Preference Share.
b) Non participating Preference Share
When a preference shareholder receives only a fixed rate of dividend every year and do not
enjoy the additional participation in the surplus profit, then the type of shares held by the
shareholder is known as Non Participating Preference Shares.
It must be noted that all Preference Shares are non-participating until and unless expressly
stated.
→ On the basis of Redemption:
a) Redeemable preference share
When a preference shareholder is repaid by the company after a certain specified period in
accordance with the term specified in the Section 80 of Company Act of 1956, then the type of
the shares held by him/her is known as Redeemable Preference Shares.
b) Non Redeemable Preference share

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These shares are not repaid by the company during its lifetime. As per the Section 80A of the
Company Act of 1956, no company can issue Non Redeemable Preference Shares. It is merely
a theoretical concept.
→ On the basis of Convertibility:
a) Convertible Preference Share
The shareholders holding Convertible Preference Shares have a right to convert his/her shares
into equity shares.
b) Non Convertible Preference Share
Unlike Convertible Preference Shares, the shareholders holding Non Convertible Preference
Shares do not enjoy the right to convert their shares into equity shares.

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Q6 Describe the provision of law relating to ‘Calls-in-Arrears’ and ‘Calls-in-Advance’.

Answer. Calls-in-Arrears: When a shareholder fails to pay the amount due on allotment or any
subsequent calls, then it is termed as Calls-in-Arrears. The Company is authorised by its Article
of Association to charge interest at a specified rate on the amount of Call in Arrears from the
due date till the date of payment. If the Article of Association is silent in this regard, then Table A
shall be applicable that is interest at 5% p.a. is charged from the shareholders. As per the
Revised Schedule VI of the Companies Act, Calls-in-Arrears are deducted from the Called-up
Share Capital in the Notes to Accounts (that is prepared outside the Balance Sheet) under the
head 'Share Capital'. The final amount of Share Capital is shown on the Equity and Liabilities
side of the Company’s Balance Sheet. The company can also forfeit the shares on account of
non-payment of the calls money after giving proper notice to the shareholders.
Example- X Ltd. issued 12,000 shares of Rs 10 each. All the shares were duly subscribed,
however, the first and final call of Rs 4 on 5,000 shares remained unpaid.
X Ltd.
Balance Sheet

Note Amount
Particulars
No. (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital 1 1,00,000
2. Non-Current Liabilities -

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3. Current Liabilities -

Total

II. Assets
1. Non-Current Assets -
2. Current Assets -

Total

NOTES TO ACCOUNTS

Note Amount
Particulars
No. (Rs)
1 Share Capital
Authorised Share Capital
…….. shares of Rs 10 each -
Issued Share Capital
12,000 shares of Rs 10 each 1,20,000
Subscribed, Called-up and Paid-up Share Capital
12,000 shares of Rs 10 each 1,20,000
Less: Calls-in-Arrears (5,000×4) 1,00,000
(20,000)

Calls-in-Advance: When a shareholder pays the whole amount or a part of the amount in
advance, i.e. before the company calls, then it is termed as Calls-in-Advance. The company is
authorised by its Article of Association to pay interest at the specified rate on call in advance
from the date of payment till the date of call made. If the Article of Association is silent in this
regard, then the Table A shall be applicable that is, interest at 6% p.a. is provided to the
shareholders. As per the Revised Schedule VI of the Companies Act, Calls-in-Advance (along
with interest on it) is added to the 'Other Current Liabilities' in the Notes to Accounts. The final
amount of Other Current Liabilities is shown under the main head of 'Current Liabilities' on the
Equity and Liabilities side of the Company's Balance Sheet.
Example- X Ltd. issued 12,000 shares of Rs 10 each. All the shares were duly subscribed. The

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final call of Rs 3 was not yet made, however, a shareholder holding 5,000 shares paid the final
call installment in advance along with the allotment money.
X Ltd.
Balance Sheet

Note Amount
Particulars
No. (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital 1 84,000
2. Non-Current Liabilities
3. Current Liabilities
a. Other Current Liabilities 2 15,000
Total

II. Assets
1. Non-Current Assets
2. Current Assets

Total

NOTES TO ACCOUNTS

Note Amount
Particulars
No. (Rs)
1 Share Capital
Authorised Share Capital
…….. shares of Rs 10 each -
Issued Share Capital
12,000 shares of Rs 10 each 1,20,000
Subscribed, Called-up and Paid-up Share Capital
12,000 shares of Rs 10 each, Rs 7 called-up 84,000

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2 Other Current Liabilities
Calls-in-Advance (5,000×3) 15,000

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Q7 Explain the terms ‘Over-subscription’ and ‘Under-subscription’. How are they dealt with in
accounting records?

Answer. When the total number of applications received for shares exceeds the number of
shares offered by the company to the public, the situation of Over-subscription arises. A
company can opt for any of the three alternatives to allot shares in case of Over-subscription of
shares.
i) Excess applications are refused and money received on excess applications is returned to
the applicants.
The company can refuse excess applications and the money received on these excess
applications is returned to the applicants.
Share Application A/c Dr.
To Share Capital A/c
To Bank A/c
(Excess application money returned)
Example: Shares issued 10,000 @ Rs 10 per share and money received for 12,000 shares.
Amount is payable Rs 2 on application, Rs 5 on allotment, Rs 3 on first and final call.
Bank A/c Dr. 24,000
To Share Application A/c 24,000
(Application money received for 12,000 shares)
Share Application A/c Dr. 24,000
To Share Capital A/c 20,000
To Bank A/c 4,000
(Application money transferred to Share Capital
Account and the excess money returned)

ii) Pro rata Basis

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The company can allot shares on pro rata basis to all the share applicants. The excess amount
received in the application is adjusted on the allotment.
Share Application A/c Dr.
To Share Capital A/c
To Share Allotment A/c
(Adjustment of application money on allotment)
Example: Shares issued 10,000 @ Rs 10 per share and money received for 12,000 shares.
Amount is payable Rs 2 on application, Rs 5 on allotment, Rs 3 on first and final call.
Bank A/c Dr. 24,000
To Share Application A/c 24,000
(Application money received for 12,000 shares)
Share Application A/c Dr. 24,000
To Share Capital A/c 20,000
To Share Allotment A/c 4,000
(Application money transferred to Share Capital
Account and the balance amount is transferred to
Share Allotment Account)
Share Allotment A/c Dr. 50,000
To Share Capital A/c 50,000
(Amount due on allotment of 10,000 shares @ Rs
5
per share)
Bank A/c Dr. 46,000
To Share Allotment 46,000
(Allotment money received, Rs 50,000 – Rs 4,000)

iii) Pro rata and refund of money
In this case, the company follows a combination of both the method. It may reject some share
applications and may allot some applications on the pro rata basis.
Share Application A/c Dr.
To Share Capital A/c
To Share Allotment A/c

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To Bank A/c
(Application money transferred to Share Capital
Account and the balance amount is transferred to
Share Allotment Account and the excess
application
money is refund)
Example: Shares issued 10,000 @ Rs 10 per share and money received for 13,000 shares.
Amount is payable Rs 2 on application, Rs 5 on allotment, Rs 3 on first and final call. If the
company rejects the applications for 1,000 shares and allots the remaining on the pro rata
basis.

Bank A/c Dr. 26,000
To Share Application A/c 26,000
(Application money received for 12,000 shares)

Share Application A/c Dr. 26,000
To Share Capital A/c (10,000 × Rs 2) 20,000
To Share Allotment A/c (2,000 × Rs 2) 4,000
To Bank A/c (1,000 × Rs 2) 2,000
(Amount received on share application adjusted
to
Share Capital and share allotment and balance is
refunded)

Share Allotment A/c Dr. 50,000
To Share Capital A/c 50,000
(Amount due on share allotment of 10,000 share @
Rs 5 per share)

Bank A/c Dr. 46,000
To Share Allotment A/c 46,000
(Allotment money received, Rs 50,000 – Rs 4,000)

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Under-subscription- When the number of shares applied by the public is lesser than the number
of shares issued by the company, then the situation of Under-subscription arises. As per the
Company Act, the Minimum Subscription is 90% of the shares issued by the company. This
implies that the company can allot shares to the applicants provided if applications for 90% of
the issued shares are received. Otherwise, the company should refund the entire application
amount received. In this regard, necessary Journal entry is passed only after receiving and
refunding of the application money.

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Q8 Describe the purposes for which a company can use ‘Securities Premium Account’.

Answer. As per the Section 78 of the Companies Act of 1956, the amount of securities premium
can be used by the company for the following activities:
→ For paying up unissued shares of the company to be issued to members (shareholders)
of the company as fully paid bonus share,
→ For writing off the preliminary expenses of the company,
→ For writing off the expenses of, or the commission paid or discount allowed on, any issue
of shares or debentures of the company,
→ For paying up the premium that is to be payable on redemption of preference shares or
debentures of the company.
→ Further, as per the Section 77A, the securities premium amount can also be utilised by
the company to Buy-back its own shares.

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Q9 State clearly the conditions under which a company can issue shares at a discount.

Answer. As per the Section 79 of the Company Act of 1956, following are the conditions under
which a company can issue shares at a discount.
→ A company can issue shares at discount provided it has previously issued such type of
shares.
→ The issue of shares at a discount is authorised by a resolution passed by the company
in the General Meeting and sanction obtained from the Company Law Tribunal.
→ The resolution specifies that the maximum rate of discount is 10% of the face value of
the shares, unless higher percentage of discount allowed by the Company Law Tribunal.
→ A company can issue shares at discount atleast after one year from the date of

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commencing business.
→ If a company wants to issue shares at discount, then it must issue them within two
months of obtaining sanction from the Company Law Tribunal.
→ Every prospectus related to the issue of the shares should explicitly and clearly contain
particulars of the discount allowed on the issue of shares.

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Q10 Explain the term ‘Forfeiture of Shares’ and give the accounting treatment on forfeiture.

Answer. If a shareholder fails to pay the allotment money and/or any subsequent calls, then the
company has the right to forfeit shares by giving a proper notice to the shareholder.
As per the Table A of the Company Act, the procedure of forfeiting shares is mentioned below.
→ A notice is sent to default shareholder stating him/her to pay Calls in Arrears along with
the interest accrued on the outstanding calls money within a period of 14 days of the
receipt of notice, otherwise, the shares will be forfeited.
→ If the shareholder does not pay the amount, then the company has the right to forfeit
his/her share by passing a resolution.
→ A notice of that resolution is send to the default shareholder and a public notice of the
same is published in a daily newspaper.
→ The name of the shareholder is removed from the register of members (i.e.
shareholders).

Accounting Treatment for Forfeiture of Shares:
→ Forfeiture of Shares that were issued at Par
Share Capital A/c Dr. (amount called up)
To Share Allotment A/c (amount not received)
To Share Calls A/c (amount not received)
To Share Forfeiture A/c (amount received)
(Shares forfeited)

→ Forfeiture of Shares that were issued at Premium
a) If premium is received, then the premium is not shown.
Share Capital A/c Dr. (amount called up)
To Share Allotment A/c (amount not received)

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To Share Calls A/c (amount not received)
To Share forfeiture A/c (amount received)
(Share forfeited)

→ If premium is not received, then the premium is shown.

Share Capital A/c Dr. (amount called up excluding premium)
Share Premium A/c Dr. (amount not received)
To Share Allotment A/c (amount not received including
premium)
To Share Calls A/c (amount not received)
To Share Forfeiture A/c (amount received including premium)
(Share forfeited)

→ Forfeiture of Shares that were issued at Discount
Share Capital A/c Dr. (amount called up, plus discount)
To Discount on Issue of Shares A/c (amount of discount)
To Share Allotment A/c (amount not received)
To Share Calls A/c (amount not received)
To Share Forfeiture A/c (amount received)
(Share forfeited)

Page : 64 , Block Name : Long answers

Q1 Anish Limited issued 30,000 equity shares of Rs 100 each payable at Rs 30 on application,
Rs 50 on allotment and Rs 20 on Ist and final call. All money was duly received.
Record these transactions in the journal of the company.

Answer.
In the books of Anish Limited

Page 18 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 9,00,000
To Equity Share Application A/c 9,00,000
(Application money received on application for
30,000 equity shares @ Rs 30 per share)

Equity Share Application A/c Dr. 9,00,000
To Equity Share Capital A/c 9,00,000
(Share Application money transferred to Share
Capital
Account)

Equity Share Allotment A/c Dr. 15,00,000
To Equity Share Capital A/c 15,00,000
(Allotment money due on 30,000 @ Rs 50 per
share)

Bank A/c Dr. 15,00,000
To Equity Share Allotment A/c 15,00,000
(Share Allotment money received for 30,000
shares @
Rs 50 per share)

Equity Share First and Final Call A/c Dr. 6,00,000
To Equity Share Capital A/c 6,00,000
Share First and Final call due on 30,000 shares
@ Rs 20
per share)

Page 19 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Bank A/c Dr. 6,00,000
To Equity Share First and Final Call A/c 6,00,000
(Share First and Final Call money received for
30,000
shares @ Rs20 per share)

Page : 65 , Block Name : Numerical answers

Q2 The Adersh Control Device Ltd was registered with the authorised capital of Rs 3,00,000
divided into 30,000 shares of Rs 10 each, which were offered to the public. Amount payable as
Rs 3 per share on application, Rs 4 per share on allotment and Rs 3 per share on first and final
call. These share were fully subscribed and all money was dully received. Prepare journal and
Cash Book.

Answer.
In the books of Adersh Control Device Ltd
Journal
Date Particulars L.F. Debit Credit
Amount Amount
Rs Rs
Equity Share Application A/c Dr. 90,000
To Equity Share Capital A/c 90,000
(Share Application money for 30,000 shares @ Rs 3
per share
transferred to Share Capital Account)

Equity Share Allotment A/c Dr. 1,20,000
To Equity Share Capital A/c 1,20,000
(Share Allotment money due on 30,000 @ Rs 4 per
share)

Equity Share First and Final Call A/c Dr. 90,000

Page 20 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Equity Share Capital A/c 90,000
(Share First and Final Call due on 30,000 @ Rs 3
per share)

Cash Book (Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs
Equity Share 90,000
Application
Equity Share 1,20,000
Allotment
Equity Share First 90,000 By Balance c/d 3,00,000
and Final Call
3,00,000 3,00,000

Page : 65 , Block Name : Numerical answers

Q3 Software solution India Ltd inviting application for 20,000 equity share of Rs 100 each,
payable Rs 40 on application, Rs 30 on allotment and Rs 30 on call. The company received
applications for 32,000 shares. Application for 2,000 shares were rejected and money returned
to Applicants. Applications for 10,000 shares were accepted in full and applicants for 20,000
share allotted half of the number of share applied and excess application money adjusted into
allotment. All money received due on allotment and call. Prepare journal and cash book.

Answer.
In the books of Software Solution India Ltd.
Journal
Date Particulars L.F. Debit Credit
Amount Amount

Page 21 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Rs Rs
Equity Share Application A/c Dr. 12,00,000
To Equity Share Capital A/c 8,00,000
To Equity Share Allotment A/c 4,00,000
(Application money transferred to Equity Share
Capital for 20,000 shares @ Rs 40 and Rs
4,00,000 is adjusted towards allotment)

Equity Share Allotment A/c Dr. 6,00,000
To Equity Share Capital A/c 6,00,000
(Equity Share Allotment money due on 20,000
@ Rs 30
per share)

Equity Share First and Final call A/c Dr. 6,00,000
To Equity Share Capital A/c 6,00,000
(Equity share on First and Final call due on
20,000 @
Rs 30 per share)

Cash Book (Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs
Equity Share 12,80,000 Equity Share 80,000
Application Application
Equity Share 2,00,000 Balance c/d 20,00,000
Allotment
Equity Share First 6,00,000
and Final Call
20,80,000 20,80,000

Page 22 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Working Note:

Amount due on Allotment for 20,000 shares @ Rs 30 per share 6,00,000
Money adjusted on application 10,000 shares @ Rs 40 each 4,00,000
Money to be received on Allotment 2,00,000

Page : 65 , Block Name : Numerical answers

Q4 Rupak Ltd. issued 10,000 shares of Rs 100 each payable Rs 20 per share on application,
Rs 30 per share on allotment and balance in two calls of Rs 25 per share. The application and
allotment money were duly received. On first call all member pays their dues except one
member holding 200 shares, while another member holding 500 shares paid for the balance
due in full. Final call was not made.
Give journal entries and prepare cash book.
Answer.
In the books of Rupak Ltd.
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Application A/c Dr. 2,00,000
To Share Capital A/c 2,00,000
(Application money for 10,000 shares transferred to
Share Capital
Account)

Share Allotment A/c Dr. 3,00,000
To Share Capital A/c 3,00,000
(Allotment money due on 10,000 shares @ Rs 30 per
share)

Share First Call A/c Dr. 2,50,000

Page 23 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Share Capital A/c 2,50,000
(Share First Call due on 10,000 shares @ Rs 25 per
share)

Calls in Arrears A/c Dr. 5,000
To Share First Call A/c 5,000
(Call in arrears on 200 shares @ Rs 25 per share)

Cash Book (Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs
Share Application 2,00,000
Share Allotment 3,00,000
Share first call 2,45,000 By Balance c/d 7,57,500
Calls in Advance 12,500
7,57,500 7,57,500

Working Note:

Money due on First Call for 10,000 shares @ 25 each 2,50,000
Less: Calls in Arrear for 200 shares @ Rs 25 per Share (5,000)
Money Received on First Call 2,45,000
Add: Calls received in advance on 500 shares @ Rs25 per 12,500
share
2,57,500

Page : 65 , Block Name : Numerical answers

Q5 Mohit Glass Ltd. issued 20,000 shares of Rs 100 each at Rs 110 per share, payable Rs 30

Page 24 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

on application, Rs 40 on allotment (including Premium), Rs 20 on first call and Rs 20 on final
call. The applications were received for 24,000 shares and allotted 20,000 shares and reject
4,000 shares and amount returned thereon. The money was duly received.
Give journal entries.
Answer.
In the books of Mohit Glass Ltd.
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 7,20,000
To Share Application A/c 7,20,000
(Application money received on application for
24,000 shares @ Rs 30 per share)

Share Application A/c Dr. 7,20,000
To Share Capital A/c (Bank Column) 6,00,000
To Bank A/c 1,20,000
(Share Application of 20,000 shares @ Rs 30 transferred
to Share
Capital Account and the balance returned)

Share Allotment A/c Dr. 8,00,000
To Share Capital A/c 6,00,000
To Share Premium A/c 2,00,000
(Allotment money due on 20,000 shares @ 40 per share
including
Rs 10 for premium)

Bank A/c Dr. 8,00,000
To Share Allotment A/c 8,00,000
(Allotment money received on 20,000 shares @ Rs 40

Page 25 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

per share)

Share First Call A/c Dr. 4,00,000
To Share Capital A/c 4,00,000
(Share First Call money due on 20,000 shares @ Rs 20
per share)

Bank A/c Dr. 4,00,000
To Share First Call A/c 4,00,000
(Share First Call money received on 20,000 shares @ Rs
20 per
share)

Share Final Call A/c Dr. 4,00,000
To Share Capital A/c 4,00,000
(Share Final Call money due on 20,000 shares @ Rs 20
per share)

Bank A/c Dr. 4,00,000
To Share Final Call A/c 4,00,000
(Share Final Call money received on 20,000 shares @
Rs 20 per share)

Page : 65 , Block Name : Numerical answers

Q6 A limited company offered for subscription of 1,00,000 equity shares of Rs 10 each at a
premium of Rs 2 per share. 2,00,000. 10% Preference shares of Rs 10 each at par.
The amount on share was payable as under :
Equity Shares Preference Shares
On Application Rs 3 per share Rs 3 per share
On Allotment Rs 5 per share Rs 4 per share

Page 26 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

(including a premium)
On First Call Rs 4 per share Rs 3 per share
All the shares were fully subscribed, called-up and paid.
Record these transactions in the journal and cash book of the company:
Answer.
In the books of A Ltd.
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Equity Share Application A/c Dr. 3,00,000
10% Preference Share Application A/c Dr. 6,00,000
To Equity Share Capital A/c 3,00,000
To 10% Preference Share Capital A/c 6,00,000
(Application money transferred to Equity Share
Capital )

Equity Share Allotment A/c Dr. 5,00,000
10% Preference Share Allotment A/c Dr. 8,00,000
To Equity Share Capital A/c 3,00,000
To Securities Premium A/c 2,00,000
To 10% Preference Share Allotment A/c 8,00,000
(Amount due on allotment)

Equity Share First and Final Call A/c Dr. 4,00,000
10% Preference Share First and Final Call A/c Dr. 6,00,000
To Equity Share Capital A/c 4,00,000
To 10% Preference Share Capital A/c 6,00,000
(Amount on First and Final call due)

Page 27 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Cash Book( Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs
Equity Share 3,00,000
Application
10% Preference Share 6,00,000
Application
Equity Share Allotment 5,00,000
10% Preference Share 8,00,000
Allotment
Equity Share First and 4,00,000 Balance c/d 32,00,000
Final Call
10% Preference Share 6,00,000
First & Final Call
32,00,000 32,00,000

Page : 65 , Block Name : Numerical answers

Q7 Eastern Company Limited, having an authorised capital of Rs 10,00,000 in shares of Rs 10
each, issued 50,000 shares at a premium of Rs 3 per share payable as follows :
On Application Rs 3 per share
On Allotment (including premium) Rs 5 per share
On first call (due three months after allotment) and
the balance as and when required.
Rs 3 per share
Applications were received for 60,000 shares and the directors allotted the shares as follows :
(a) Applicants for 40,000 shares received shares, in full.
(b) Applicants for 15,000 shares received an allotment of 8,000 shares.
(c) Applicants for 500 shares received 200 shares on allotment, excess money being returned.
All amounts due on allotment were received.
The first call was duly made and the money was received with the exception of the call due on
100 shares.

Page 28 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Give journal and cash book entries to record these transactions of the company. Also prepare
the Balance Sheet of the company.

Answer.
In the books of Eastern Company Limited
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Application A/c Dr. 1,80,000
To Share Capital A/c 1,50,000
To Share Allotment A/c 30,000
(Share Application money for 50,000 shares transferred
to Share Capital Account and the excess money
transferred to Share Allotment Account)

Share Allotment A/c Dr. 2,50,000
To Share Capital A/c 1,00,000
To Share Premium A/c 1,50,000
(Allotment money due on 50,000 share @ Rs 5 per share
including Rs 3 security premium)

Share First Call A/c Dr. 1,50,000
To Share Capital A/c 1,50,000
(First call due on 50,000 share @ Rs 3 per
share)

Cash Book (Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs

Page 29 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Share Application 1,80,000
Share Allotment 2,20,000 Balance c/d 5,49,700
Share First Call 1,49,700
5,49,700 5,49,700

Eastern Company Limited
Balance Sheet
Amount
Particulars Note No.
(Rs)
I. Equity and Liabilities
1.Shareholders’ Funds
a. Share Capital 1 3,99,700
b. Reserves and Surplus 2 1,50,000
2.Non-Current Liabilities
3.Current Liabilities
Total 5,49,700

II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents 3 5,49,700
Total 5,49,700

NOTES TO ACCOUNTS

Amount
Note No. Particulars
(Rs)
1 Share Capital
Authorised Share Capital
1,00,000 shares of Rs 10 each 10,00,000

Page 30 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Issued Share Capital
50,000 shares of Rs 10 each 5,00,000
Subscribed, Called up and Paid up Share
Capital
50,000 shares of Rs 10 each, Rs 8 4,00,000
called-up
Less: Calls-in-Arrears (300) 3,99,700

2 Reserves and Surplus
Securities Premium 1,50,000

3 Cash and Cash Equivalents
Cash at Bank 5,49,700

Page : 66 , Block Name : Numerical answers

Q8 Sumit Machine Ltd issued 50,000 shares of Rs 100 each at discount of 5%. The shares
were payable Rs 25 on application, Rs 40 on allotment and Rs 30 on first and final call. The
issue were fully subscribed and money were duly received except the final call on 400 shares.
The discount was adjusted on allotment. Give journal entries and prepare balance sheet.
Answer.
In the books of Sumit Machine Ltd.
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 12,50,000
To Share Application A/c 12,50,000
(Share Application money received on application for
50,000 shares @ Rs 25 per share)

Share Application A/c Dr. 12,50,000

Page 31 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Share Capital A/c 12,50,000
(Share Application money of 50,000 shares transferred
to Share Capital Account)

Share Allotment A/c Dr. 20,00,000
Discount on Issue of Shares Dr. 2,50,000
To Share Capital A/c 22,50,000
(Share Allotment money due on 50,000 shares @ Rs 40
each at discount of Rs 5)

Bank A/c Dr. 20,00,000
To Share Allotment A/c 20,00,000
(Allotment money received for 50,000 shares @ Rs 40
per share)

Share First and Final Call A/c Dr. 15,00,000
To Share Capital A/c 15,00,000
(Share First and Final call due on 50,000 shares @ Rs
30 per share)

Bank A/c Dr. 14,88,000
Calls in Arrears A/c Dr. 12,000
To Share First and Final Call A/c 15,00,000
(Share First and Final Call received except 400 shares)

Sumit Machine Ltd.
Balance Sheet

Note Amount
Particulars
No. (Rs)
I. Equity and Liabilities

Page 32 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

1. Shareholders’ Funds
a. Share Capital 1 49,88,000
2. Non-Current Liabilities
3. Current Liabilities
Total 49,88,000
II. Assets
1. Non-Current Assets
a. Other Non-Current Assets 2 2,50,000
2. Current Assets
a. Cash and Cash Equivalents 3 47,38,000
Total 49,88,000

NOTES TO ACCOUNTS

Note Amount
Particulars
No. (Rs)
1 Share Capital
Authorised Share Capital
…….. shares of Rs 100 each -
Issued Share Capital
50,000 shares of Rs 100 each 50,00,000
Subscribed, Called-up and Paid-up Share Capital
50,000 shares of Rs 100 each 50,00,000
Less: Calls-in-Arrears (12,000) 49,88,000

2 Other Non-Current Assets
Discount on Issue of Shares 2,50,000

3 Cash and Cash Equivalents
Cash at Bank 47,38,000

Page 33 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Page : 66 , Block Name : Numerical answers

Q9 Kumar Ltd purchases assets of Rs 6,30,000 from Bhanu Oil Ltd. Kumar Ltd. issued equity
share of Rs 100 each fully paid in consideration. What journal entries will be made, if the share
are issued, (a) at par, (b) at discount of 10 % and (c) at premium of 20%.
Answer.
Case (a)

Page 34 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Number of shares issued at par = Amount payable/face value
6300 shares = 630000/100

Case (b)

Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Sundry Assets A/c Dr. 6,30,000
To Bhanu Oil Ltd 6,30,000
(Assets purchased from Bhanu Oil Ltd.)

Bhanu Oil Ltd Dr. 6,30,000
Discount on Issue of Share A/c Dr. 70,000
To Share Capital A/c 7,00,000
(7,000 share issued at 10% discount to Bhanu Ltd. in
consideration of assets purchased)

Number of shares issued at discount = Amount payable /(Face value - Discount per share)
7000 shares = 630000/(100-10)

Case (c)

Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Sundry Assets A/c Dr. 6,30,000
To Bhanu Oil Ltd 6,30,000
(Assets purchased from Bhanu Oil Ltd.)

Bhanu Oil Ltd Dr. 6,30,000
To Share Capital A/c 5,25,000

Page 35 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Securities Premium A/c 1,05,000
(5,250 share are issued at 20% premium to Bhanu Ltd. in
consideration of assets purchased)

Number of shares issued at premium = Amount payable /(Face value + premium per share)
5250 shares = 630000/(100+20)

Page : 66 , Block Name : Numerical answers

Q10 Bansal Heavy machine Ltd purchased machine worth Rs 3,20,000 from Handa Trader.
Payment was made as Rs 50,000 cash and remaining amount by issue of equity share of the
face value of Rs 100 each fully paid at an issue price of Rs 90 each.
Give journal entries to record the above transaction.

Answer.
In the books of Bansal Heavy Machine Ltd
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Machinery A/c Dr. 3,20,000
To Cash A/c 50,000
To Handa Traders 2,70,000
(Machine purchased from Handa Traders paid Rs 50,000 in
cash immediately)

Handa Trader Dr. 2,79,000
Discount on Issue of Shares A/c Dr. 30,000
To Share Capital A/c 3,00,000
(3,000 share issued at Rs 90 face value of Rs 100 each to

Page 36 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Handa Traders in consideration of amount due to him for
machinery purchased)

Working Notes:-
1. Number of share issued
= amount payable / Issue price
= 270000/90 = 3000 shares

Page : 66 , Block Name : Numerical answers

Q11 Naman Ltd issued 20,000 shares of Rs 100 each, payable Rs 25 on application, Rs 30 on
allotment , Rs 25 on first call and The balance on final call. All money duly received except
Anubha, who holding 200 shares did not pay allotment and calls money and Kumkum, who
holding 100 shares did not pay both the calls. The directors forfeited shares of Anubha and
kumkum.
Give journal entries.
Answer.
In the Books of Naman Ltd.
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 5,00,000
To Share Application A/c 5,00,000
(Shares Application money received for 20,000 shares @
Rs 25 each)

Share Application A/c Dr. 5,00,000
To Share Capital 5,00,000
(Share Application money of 20,000 shares @ Rs 25
each

Page 37 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

transferred to Share Capital Account)

Share Allotment A/c Dr. 6,00,000
To Share Capital A/c 6,00,000
(Share Allotment due on 20,000 shares @ Rs 30
each)

Bank A/c Dr. 5,94,000
To Share Allotment A/c 5,94,000
(Allotment money received for 19,800 shares @ Rs 30
per share)

Share First Call A/c Dr. 5,00,000
To Share Capital A/c 5,00,000
(Share First Call money due on 20,000 @ Rs 25 per
share)

Bank A/c Dr. 4,92,500
To Share First Call A/c 4,92,500
(Share First Call received @ Rs 25 per share for 19,700
shares)

Share Final Call A/c Dr. 4,00,000
To Share Capital A/c 4,00,000
(Share Final Call money due on 20,000 shares @ 20 per
share)

Bank A/c Dr. 3,94,000
To Share final call A/c 3,94,000
(Share Final Call received @ Rs 20 per Share for
19,700
shares and 300 shares failed to pay the call)

Page 38 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Share Capital A/c Dr. 30,000
To Share Forfeiture A/c (200×25+100×55) 10,500
To Share Allotment (200×30) 6,000
To Share First Call A/c (300×25) 7,500
To Share Final Call A/c (300×20) 6,000
(300 Shares forfeited)

Alternatively this question can be solved by debiting Calls in Arrears Account
In the books of Naman Ltd
Journal
Date Particulars L.F. Debit Credit
Amount Amount
Rs Rs
Bank A/c Dr. 5,00,000
To Share Application A/c 5,00,000
(Share Application money received on application for
20,000 shares @ Rs 25 per share)

Share Application A/c Dr. 5,00,000
To Share Capital A/c 5,00,000
(Share Application money for 20,000 shares @ Rs 25
per share
transferred to Share Capital Account)

Share Allotment A/c Dr. 6,00,000
To Share Capital A/c 6,00,000
(Share Allotment money due on 20,000 shares @ Rs 30
per share)

Bank A/c Dr. 5,94,000
Calls in Arrears A/c Dr. 6,000

Page 39 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Share Allotment A/c 6,00,000
(Allotment money received for 19,800 shares @ Rs 30
per
share and 200 shares failed to pay the Allotment)

Share First Call A/c Dr. 5,00,000
To Share Capital A/c 5,00,000
(Share First Call money due on 20,000 shares @ Rs 25
per share)

Bank A/c Dr. 4,92,500
Calls in Arrears A/c Dr. 7,500
To Share First Call A/c 5,00,000
(Share First Call money for 19,700 shares @ Rs 25
each received except 300 shares)

Share Final Call A/c Dr. 4,00,000
To Share Capital A/c 4,00,000
(Share Final Call money due on 20,000 shares
@ Rs 20 per share)

Bank A/c Dr. 3,94,000
Calls in Arreras A/c Dr. 6,000
To Share final call A/c 4,00,000
(Share Final Call money received for 19,700 shares @
Rs 20 per share
except 300 shares)

Share Capital A/c Dr. 30,000
To Share Forfeiture A/c (200×25+100×55) 10,500
To Calls in Arrears A/c 19,500

Page 40 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

(300 Shares forfeited on account failed to pay the
money due)

Working Note:
1. Forfeited Amount

Amount on application (300 shares @ Rs 25 each) = 7,500
Amount on allotment (100 Shares @ Rs 30 each) = 3,000
10,500

Page : 66 , Block Name : Numerical answers

Q12 Kishna Ltd issued 15,000 shares of Rs 100 each at a premium of Rs 10 per share, payable
as follows:
On application Rs 30
On allotment Rs 50 (including premium)
On first and final call Rs 30
All the shares subscribed and the company received all the money due, With the exception of
the allotment and call money on 150 shares. These shares were forfeited and reissued to Neha
as fully paid share of Rs 12 each.
Give journal entries in the books of the company.
Answer.
In the books of Krishna Ltd
Journal
Debit Credit
Dat
Particulars L.F. Amount Amount
e
Rs Rs
Bank A/c Dr. 4,50,000
To Share Application A/c 4,50,000
(Share Application money received for 15,000 shares @ Rs 30
per share)

Page 41 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Share Application A/c Dr. 4,50,000
To Share Capital A/c 4,50,000
(Share Application money of 15,000 shares transferred to Share
Capital Account)

Share Allotment A/c Dr. 7,50,000
To Share Capital A/c 6,00,000
To Securities Premium A/c 1,50,000
(Share Allotment money on 15,000 shares @ Rs 50 per share
including Rs 10 securities premium due)

Bank A/c Dr. 7,42,500
To Share Allotment A/c 7,42,500
(Share Allotment received on 14,850 shares and 150 shares
failed to pay the money due)

Share First and Final Call A/c Dr. 4,50,000
To Share Capital A/c 4,50,000
(Share First and Final Call for 15,000 shares @ Rs 30 per share
due)

Bank A/c Dr. 4,45,500
To Share First and Final Call A/c 4,45,500
(Share First and Final Call received for 14,850 shares @ Rs 30
per share and 150 shares failed to pay amount due)

Share Capital A/c (150×100) Dr. 15,000
Share Premium A/c (150×10) Dr. 1,500
To Share Allotment A/c (150×50) 7,500
To Share First and Final Call A/c (150×30) 4,500
To Share Forfeiture A/c (150×30) 4,500

Page 42 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

(150 shares forfeited for non-payment of Share Allotment and
Share
First and Final Call )

Bank A/c Dr. 18,000
To Share Capital A/c 15,000
To Securities Premium A/c 3,000
(150 shares of Rs 100 each reissued @ Rs 120 to
Neha)

Share Forfeiture A/c Dr. 4,500
To Capital Reserve A/c 4,500
(Balance of Share Forfeiture Account transferred to Capital
Reserve
Account)

Note: In the solution, the reissued price of Rs 12 has been assumed as Rs 120 per share.

Page : 67 , Block Name : Numerical answers

Q13 Arushi Computers Ltd issued 10,000 equity shares of Rs 100 each at 10% discount. The
net amount payable as follows:
On application Rs 20
On allotment Rs 30 (Rs 40 – discount Rs 10 )
On first call Rs 30
On final call Rs 10
A shareholder holding 200 shares did not pay final call. His shares were forfeited. Out of these
150 shares were reissued to Ms. Sonia at Rs 75 per shares.
Give Journal entries in the books of the company.
Answer.
In the books of Arushi Computers Ltd.
Journal

Page 43 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 2,00,000
To Share Application A/c 2,00,000
(Share Application money received for 10,000 shares @
Rs 20 per share)

Share Application A/c Dr. 2,00,000
To Share Capital A/c 2,00,000
(Share Application money for 10,000 shares transferred
to Share
Capital Account)

Share Allotment A/c Dr. 3,00,000
Discount on Issue of Shares A/c Dr. 1,00,000
To Share Capital A/c 4,00,000
(Allotment money due on 10,000 shares @ Rs 30 per
share
excluding discount Rs 10)

Bank A/c Dr. 3,00,000
To Share Allotment A/c 3,00,000
(Share Allotment money received for 10,000 shares @
Rs 30 per
share)

Share First Call A/c Dr. 3,00,000
To Share Capital A/c 3,00,000
(Share First Call money due on 10,000 shares @ Rs 30
per share)

Page 44 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Bank A/c Dr. 3,00,000
To Share First Call A/c 3,00,000
(First Call money received for 10,000 shares @ Rs 30
per share)

Share Final Call A/c Dr. 1,00,000
To Share Capital A/c 1,00,000
(Final Call money due on 10,000 shares @ Rs 10
per share)

Bank A/c Dr. 98,000
To Share final call A/c 98,000
(Final Call money received for 9800 shares @ Rs 10 per
share and 200 shares failed to pay)

Share Capital A/c (200×100) Dr. 20,000
To Share Final Call A/c (200×10) 2,000
To Discount on Issue of Shares A/c (200×10) 2,000
To Share Forfeiture A/c (200×80) 16,000
(200 shares forfeited for non-payment of Final Call Rs
10 per share)

Bank A/c (150×75) Dr. 11,250
Discount on Issue of Shares (150×10) Dr. 1,500
Share Forfeiture A/c (150×15) Dr. 2,250
To Share Capital A/c (150×100) Dr. 15,000
(150 forfeited shares reissued at Rs 100 per share
for Rs 75)

Share Forfeiture A/c Dr. 9,750
To Capital Reserve A/c 9,750
(Balance of 150 reissue shares after adjustment
transferred to

Page 45 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Capital Reserve Account)

Working Notes:
Amount Transferred to Capital Reserve A/c

Amount credited to Share Forfeiture Rs 80 per
share

Less: Amount debited to Share Rs 15 per
Forfeiture share

Balance after adjustment Rs 65 per
share

Amount transferred to Capital Reserve Account = Balance per share after adjustment × Number
of shares reissued
Rs 9,750 = Rs 65 × Rs 150 per share

Page : 67 , Block Name : Numerical answers

Q14 Raunak Cotton Ltd. issued a prospectus inviting applications for 6,000 equity shares of Rs
100 each at a premium of Rs 20 per shares, payable as follows:
On application Rs 20
On allotment Rs 50 (including premium)
On first call Rs 30
On final call Rs 20
Applications were received for 10,000 shares and allotment was made Pro-rata to the
applicants of 8,000 shares, the remaining applications Being refused. Money received in excess
on the application was adjusted toward the amount due on allotment.
Rohit, to whom 300 shares were allotted failed to pay allotment and calls money, his shares
were forfeited. Itika, who applied for 600 shares, failed to pay the two calls and her share were
also forfeited. All these shares were sold to Kartika as fully paid for Rs 80 per shares.
Give journal entries in the books of the company.
Answer.
In the books of Raunak Cotton Ltd.

Page 46 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 2,00,000
To Share Application A/c 2,00,000
(Share Application money received on 10,000
shares)

Share Application A/c Dr. 2,00,000
To Share Capital A/c 1,20,000
To Share Allotment A/c 40,000
To Bank 40,000
(Share Application money adjusted)

Share Allotment A/c Dr. 3,00,000
To Share Capital A/c 1,80,000
To Share Premium A/c 1,20,000
(Share allotment money due)

Bank A/c Dr. 2,47,000
To Share Allotment A/c 2,47,000
(Allotment money received except 300 shares)

Share First Call A/c Dr. 1,80,000
To Share Capital A/c 1,80,000
(Share First Call money due)

Bank A/c Dr. 1,57,500
To Share First Call A/c 1,57,500
(Share First Call money received except 750

Page 47 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

(300+450 shares)

Share Final Call A/c Dr. 1,20,000
To Share Capital A/c 1,20,000
(Share Final Call money is due)

Bank A/c Dr. 1,05,000
To Share Final Call 1,05,000
(Share Final Call money received except 750
shares)

Share Capital A/c (750×100) Dr. 75,000
Share Premium A/c (300×20) Dr. 6,000
To Share Allotment A/c 13,000
To Share first call A/c (750×30) 22,500
To Share final call A/c (750×20) 15,000
To Share Forfeiture A/c 30,500
(750 shares were forfeited)

Bank A/c Dr. 60,000
Share Forfeiture A/c Dr. 15,000
To Share Capital A/c 75,000
(Forfeited shares reissued @ 80 per share)

Share Forfeiture A/c Dr. 15,500
To Capital Reserve A/c 15,500
(Share Forfeiture Account transferred capital
reserve)

Working Note:

Page 48 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

1. Number of shares applied by Rohit
= Total number of applied shares × Number of alloted shares / Total number of alloted
shares
= 8000×300/6000 = 400 shares
2. Call in arrears by Rohit on allotment

Money received on Application (400×20) 8,000
Less: Transferred to share capital (300×20) 6,000
Excess adjusted on allotment 2,000

Allotment due (300×50) 15,000
Less: Excess adjustment on allotment 2,000
Call in arrear 13,000

Total Number of shares applied by Itika
= Total number of alloted shares × Number of applied shares / Total number of applied shares
= 6000×600/ 8000 = 450 shares

4. Share Forfeiture amount

Amount on application
300×20 6,000
450×20 9,000
Excess amount received from Rohit for allotment on 2,000
pro-rata basis
Amount received on Allotment by Kartika 13,500
30,500

Page : 67 , Block Name : Numerical answers

Q15 Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs
10 each at a premium of Rs 2 per share payable as under :

Page 49 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

With Application Rs 3 per
share
On allotment (including premium) Rs 5 per
share
On First call Rs 2 per
share
On Second and Final call Rs 2 per
share
Applications were received for 1,60,000 shares. Allotment was made on pro-rata basis. Excess
money on application was adjusted against the amount due on allotment.
Rohan, whom 4,800 shares were allotted, failed to pay for the two calls. These shares were
subsequently forfeited after the second call was made. All the shares forfeited were reissued to
Teena as fully paid at Rs 7 per share.
Record journal entries in the books of the company to record these transactions relating to
share capital. Also show the company’s balance sheet.
Answer.
In the books of Himalaya Company Ltd.
Journal
Debit Credit
Dat
Particulars L.F. Amount Amount
e
Rs Rs
Bank A/c Dr. 4,80,000
To Share Application A/c 4,80,000
(Share Application money received for 1,60,000 shares @ Rs 3
per share)

Share Application A/c Dr. 4,80,000
To Equity Share Capital A/c 3,60,000
To Share Allotment A/c 1,20,000
(Share Application for 1,20,000 shares @ Rs 3 per share
transferred to Share Capital Account and remaining amount
adjusted to Allotment)

Share Allotment A/c Dr. 6,00,000

Page 50 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Equity Share Capital A/c 3,60,000
To Securities Premium 2,40,000
(Share Allotment due on 1,20,000 shares @ Rs 5 per share
including Rs 2 Securities Premium)

Bank A/c Dr. 4,80,000
To Share Allotment A/c 4,80,000
(Share allotment for 1,20,000 shares @ Rs 5 per share received)

Share First Call A/c Dr. 2,40,000
To Equity Share Capital A/c 2,40,000
(Share First Call due on 1,20,000 shares @ Rs 2 per share)

Bank A/c Dr. 2,30,400
To Share First Call A/c 2,30,400
(Share First Call received on 1,15,200 shares @ Rs 2 per share
and 4,800 shares failed to pay)

Share Final Call A/c Dr. 2,40,000
To Equity Share Capital A/c 2,40,000
(Share Final call due on 1,20,000 shares @ Rs 2 per share)

Bank A/c Dr. 2,30,400
To Share Final Call A/c 2,30,400
(Share Final Call received on 1,15,200 shares @ Rs 2 per share
and 4,800 shares failed to pay)

Equity Share Capital A/c (4,800×10) Dr. 48,000
To Share First Call A/c (4,800×2) 9,600
To Share Final Call A/c (4,800×2) 9,600
To Share Forfeiture A/c (4,800×6) 28,800

Page 51 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

(4,800 shares forfeited for the non-payment of First Call and Final
Call)

Bank A/c Dr. 33,600
Share Forfeiture A/c Dr. 14,400
To Equity Share Capital 48,000
(4,800 shares reissued @ Rs 7 per share, fully paid-up)

Share Forfeiture A/c Dr. 14,400
To Capital Reserve A/c 14,400
(Share forfeiture balance of 4,800 shares
transferred to Capital Reserve Account)

Himalaya Company Limited
Balance Sheet
Not Amount
Particulars e
No. (Rs)

I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital 1 12,00,000
b. Reserves and Surplus 2 2,54,400
2. Non-Current Liabilities
3. Current Liabilities
Total 14,54,400

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents 3 14,54,400
Total 14,54,400

Page 52 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

NOTES TO ACCOUNTS

Amount
Note No. Particulars
(Rs)
1 Share Capital
Authorised Share Capital
…….. shares of Rs 10 each -
Issued Share Capital
1,20,000 shares of Rs 10 each 12,00,000
Subscribed, Called-up and Paid-up Share Capital
1,20,000 shares of Rs 10 each 12,00,000

2 Reserves and Surplus
Securities Premium 2,40,000
Capital Reserve 14,400 2,54,400

3 Cash and Cash Equivalents
Cash at Bank 14,54,400

Page : 68 , Block Name : Numerical answers

Q16 Prince Limited issued a prospectus inviting applications for 2,00,000 equity shares of Rs 10
each at a premium of Rs 3 per share payable as follows :
With Application Rs 2
On Allotment (including premium) Rs 5
On First Call Rs 3
On Second Call Rs 3
Applications were received for 30,000 shares and allotment was made on pro-rata basis. Money
overpaid on applications was adjusted to the amount due on allotment.
Mr. ‘Mohit’ whom 400 shares were allotted, failed to pay the allotment money and the first call,
and her shares were forfeited after the first call. Mr. ‘Joly’, whom 600 shares were allotted, failed

Page 53 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

to pay for the two calls and hence, his shares were forfeited.
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for Rs 9 per share, the
whole of Mr. Mohit’s shares being included.
Record journal entries in the books of the Company and prepare the Balance Sheet.
Answer.
In the Books of Prince Limited
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 6,00,000
To Share Application A/c 6,00,000
(Share Application money received on 3,00,000 shares
@ Rs 2 per share)

Share Application A/c Dr. 6,00,000
To Share Capital A/c 4,00,000
To Share Allotment A/c 2,00,000
(Application money on 2,00,000 shares transferred to
Share Capital Account and the balance adjusted on
allotment)

Share Allotment A/c Dr. 10,00,000
To Share Capital A/c 4,00,000
To Securities Premium A/c 6,00,000
(Allotment money due on 2,00,000 shares @ Rs 5 per
share including premium of Rs 3 per share)

Bank A/c (6,00,000 – 2,00,000 – 1,600) Dr. 7,98,400
To Share Allotment A/c 7,98,400
(Allotment money received)

Page 54 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Share First Call A/c Dr. 6,00,000
To Share Capital A/c 6,00,000
(Share First Call due on 2,00,000 shares @ Rs 3 per
share)

Bank A/c (6,00,000 – 1,200 – 1,800) Dr. 5,97,000
To Share First Call A/c 5,97,000
(First call money received)

Share Capital A/c Dr. 2,800
Share Premium A/c Dr. 1,200
To Share Forfeiture A/c 1,200
To Share Allotment A/c 1,600
To Share First Call A/c 1,200
(400 shares forfeited after first call)

Share Second Call A/c Dr. 5,98,800
To Share Capital A/c 5,98,800
(Final Call money due on 1,99,600 shares @ 3 per
share)

Bank A/c (5,98,800 – 1,800) Dr. 5,97,000
To Share Second Call A/c 5,97,000
(Second Call money received except on 600
shares)

Share Capital A/c Dr. 6,000
To Share Forfeiture A/c 2,400
To Share First Call A/c 1,800
To Share Second Call A/c 1,800
(600 shares forfeited)

Page 55 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Bank A/c Dr. 7,200
Share Forfeiture A/c Dr. 800
To Share Capital A/c 8,000
(800 Shares reissued @ Rs 9 each)

Share Forfeiture A/c Dr. 2,000
To Capital Reserve 2,000

As per the Revised Schedule VI, the Balance Sheet of Prince Limited is as follows:
Prince Limited
Balance Sheet

Note Amount
Particulars
No. (Rs)
I. Equity and Liabilities
1. Shareholders’ Fund
a. Share Capital 1 19,98,000
b. Reserves and Surplus 2 6,01,600
2. Non-Current Liabilities
3. Current Liabilities
Total 25,99,600

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents 3 25,99,600
Total 25,99,600

NOTES TO ACCOUNTS

Note Amount
Particulars
No. (Rs)
1 Share Capital

Page 56 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Authorised Share Capital
…….. shares of Rs 10 each -
Issued Share Capital
2,00,000 shares of Rs 10 each 20,00,000
Subscribed, Called-up and Paid-up Share Capital
1,99,800 shares of Rs 10 each 19,98,000

2 Reserves and Surplus
Securities Premium 5,98,800
Capital Reserve 2,800 6,01,600

3 Cash and Cash Equivalents
Cash at Bank 25,99,600

Working Notes:
1. Number of shares applied by Mohit
= Total number of applied shares × Number of alloted shares / Total number of alloted
shares
= 300000×400/200000 = 600 shares

Money received on Application (600×2) 1,200
Less: Utilised on application (400×2) (800)
Excess amount received 400

Amount due on Allotment (400×5) 2,000
Less: Excess amount received (400)
Amount due on allotment 1,600

2. Amount to be transferred to Capital Reserve

Amount forfeited on Mohit’s 400 shares 1,200

Page 57 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Amount forfeited on Joly’s 600 shares 2,400
Amount forfeited on Joly’s 400 shares (2400/600 × 400) 1,600
2,800
Less: Discount allowed on 800 shares reissued (800)
Amount to be transferred to Capital Reserve 2,000

Page : 68 , Block Name : Numerical answers

Q17 Life machine tools Limited, issued 50,000 equity shares of Rs 10 each at Rs 12 per share,
payable at to Rs 5 on application (including premium), Rs 4 on allotment and the balance on the
first and final call.
Applications for 70,000 shares had been received. Of the cash received, Rs 40,000 was
returned and Rs 60,000 was applied to the amount due on allotment, the balance of which was
paid. All shareholders paid the call due, with the exception of one share holder of 500 shares.
These shares were forfeited and reissued as fully paid at Rs 8 per share. Journalise the
transactions.
Answer.
In the books of Life machine tools Limited
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 3,50,000
To Share Application A/c 3,50,000
(Application money received on application for 70,000
shares @ Rs 5 per share including premium Rs 2)

Share Application A/c Dr. 3,50,000
To Share Capital A/c 1,50,000
To Securities Premium A/c 1,00,000
To Share Allotment A/c 60,000

Page 58 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Bank A/c 40,000
(Share Application money for 50,000 shares transferred to
Share
Capital Account and Securities Premium, Rs 60,000
adjusted to Allotment and Rs 40,000 returned)

Share Allotment A/c Dr. 2,00,000
To Share Capital A/c 2,00,000
(Share Allotment money due on 50,000 shares @ Rs 4
per share)

Bank A/c Dr. 1,40,000
To Share Allotment A/c 1,40,000
(Share Allotment money received on share
allotment)

Share First and Final A/c Dr. 1,50,000
To Share Capital A/c 1,50,000
(Share First and Final Call money due on 50,000 shares
@ Rs 3 per share)

Bank A/c Dr. 1,48,500
To Share First and Final A/c 1,48,500
(Share First and Final Call money received from 49,500
shares @ Rs 3 per share and 500 shares failed to pay)

Share Capital A/c (500×10) Dr. 5,000
To Share First and Final Call A/c (500×3) 1,500
To Share Forfeiture A/c (500×7) 3,500
(500 shares @ Rs per share fully paid up forfeited for the
non-
payment of Share First and Final Call Rs 3 per share)

Page 59 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Bank A/c Dr. 4,000
Share Forfeiture A/c Dr. 1,000
To Share Capital A/c 5,000
(500 Shares reissued @ 8 per share fully paid up)

Share Forfeiture A/c Dr. 2,500
To Capital Reserve A/c 2,500
(Balance of 500 shares in Forfeiture Account after
adjustment, transferred to Capital Reserve Account)

Page : 69 , Block Name : Numerical answers

Q18 The Orient Company Limited offered for public subscription 20,000 equity shares of Rs 10
each at a premium of 10% payable at Rs 2 on application; Rs 4 on allotment including premium;
Rs 3 on First Call and Rs 2 on Second and Final call. Applications for 26,000 shares were
received. Applications for 4,000 shares were rejected. Pro-rata allotment was made to the
remaining applicants. Both the calls were made and all the money were received except the
final call on 500 shares which were forfeited. 300 of the forfeited shares were later on issued as
fully paid at Rs 9 per share. Give journal entries and prepare the balance sheet.
Answer.
In the books of Orient Company Limited
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 52,000
To Share Application A/c 52,000
(Share Application Money received for 26,000 shares
@ Rs 2 per share)

Page 60 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Share Application A/c Dr. 52,000
To Share Capital A/c 40,000
To Share Allotment A/c 4,000
To Bank A/c 8,000
(Application money @ Rs 2 per share of 20,000 shares
transferred to Share Capital Account and money of 4,000
shares returned, remaining to Share Allotment)

Share Allotment A/c Dr. 80,000
To Share Capital A/c 60,000
To Securities Premium A/c 20,000
(Share Allotment money due on 20,000 shares @ Rs 4 per
share including Re 1 Securities Premium)

Bank A/c Dr. 76,000
To Share Allotment A/c 76,000
(Share Allotment Money received for all the shares after
adjustment of money transferred from Share Application)

Share First Call A/c Dr. 60,000
To Share Capital A/c 60,000
(Share First Call money due on 20,000 share @ Rs 2 per
share)

Bank A/c Dr. 60,000
To Share First Call A/c 60,000
(Share First Call received for 20,000 shares @ Rs 2 per share)

Share Second and Final Call A/c Dr. 40,000
To Share Capital A/c 40,000
(Share Second and Final Call money due on 20,000 shares @
Rs 2 per share)

Page 61 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Bank A/c Dr. 39,000
To Share Second and Final Call A/c 39,000
(Share Second and Final Call money received for 19,500
shares @ Rs 2 per share and 500 shares failed to pay)

Share Capital A/c Dr. 5,000
To Share Second and Final Call A/c 1,000
To Share Forfeiture A/c 4,000
(500 shares of Rs 10 per share fully called-up forfeited for
non-payment of Second and Final Call Rs 2 per share)

Bank A/c Dr. 2700
Share Forfeiture A/c Dr. 300
To Share Capital A/c 3,000
(300 shares @ Rs 10 each reissued for Rs 9 per share fully
paid-up)

Share Forfeiture A/c Dr. 2,100
To Capital Reserve A/c 2,100
(Balance of 300 shares in Share Forfeiture Account
transferred
to Capital Reserve Account, after adjustment)

Orient Company Limited
Balance Sheet
Amount
Particulars Note No.
(Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital 1 1,99,600

Page 62 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

b. Reserves and Surplus 2 22,100
2. Non-Current Liabilities
3. Current Liabilities
Total 2,21,700

II. Assets
1. Non-Current Assets
2. Current Assets
Cash and Cash Equivalents 3 2,21,700
Total 2,21,700

NOTES TO ACCOUNTS

Amount
Note No. Particulars
(Rs)
1 Share Capital
Authorised Equity Share Capital
…….. Equity Shares of Rs 10 each -
Issued Equity Share Capital
20,000 Equity Shares of Rs 10 each 2,00,000
Subscribed, Called-up and Paid-up Equity Share Capital
19,800 Equity Shares of Rs 10 each 1,98,000
Add: Shares Forfeiture 1,600 1,99,600

2 Reserves and Surplus
Securities Premium 20,000
Capital Reserve 2,100 22,100

3 Cash and Cash Equivalents
Cash at Bank 2,21,700

Page 63 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Working Notes:

Share Forfeiture Account credited Rs 8 per share

Less: Share Forfeiture Account debited Rs 1 per share

Amount transferred to Capital Reserve Account, after Rs 7 per share
adjustment

Amount transferred to Capital Reserve Account, after adjustment for 300 shares = 300 Shares
@ Rs 7 per share = Rs 2,100

Page : 69 , Block Name : Numerical answers

Q19 Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the
following terms :
Payable on application Rs 5 per share
Payable on allotment Rs 3 per share
Payable on first and final call Rs 2 per share
Applications for 5,00,000 shares were received. It was decided :
(a) to refuse allotment to the applicants for 20,000 shares;
(b) to allot in full to applicants for 80,000 shares;
(c) to allot the balance of the available shares’ pro-rata among the other applicants; and
(d) to utilise excess application money in part as payment of allotment money.
One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on
allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ Rs 9
per share. Show the journal and prepare Cash book to record the above.
Answer.
In the books of Alfa Limited
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Application A/c Dr. 24,00,000

Page 64 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Share Capital A/c 20,00,000
To Share Allotment A/c 4,00,000
(Share Application money adjusted)

Share Allotment A/c Dr. 12,00,000
To Share Capital A/c 12,00,000
(Share Allotment money due)

Share First and Final Call A/c Dr. 8,00,000
To Share Capital A/c 8,00,000
(Share First and Final Call due)

Working Note:
Number of shares applied by applicant
= Total number of applied shares × Number of alloted shares / Total number of alloted
shares
= 400000×400/320000 = 500 shares

2. Call in arrears by applicant on allotment

Money received on Application (500×5) = 2,500
Less: Amount adjusted on Application (400×5) = 2,000
Amount adjusted on Allotment 500

3.

Money due on Allotment (400×3) 1,200
Less: Money adjusted 500
Balance due on Allotment 700

Date Particulars L.F. Debit Credit

Page 65 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Amount Amount
Rs Rs
Share Capital A/c Dr. 4,000
To Share Allotment A/c 700
To Share First & Final Call A/c 800
To Share Forfeiture A/c 2,500
(400 shares forfeited)

Share Forfeiture A/c Dr. 400
To Share Capital A/c 400
(Share reissued and loss on issue charged from Share Forfeiture
Account)

Share Forfeiture A/c Dr. 2,100
To Capital Reserve A/c 2,100
(Share Forfeiture Account transferred to Capital Reserve
Account)

Cash Book (Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs
Share Application 25,00,000 Share Application 1,00,000
Share Allotment 7,99,300 Balance c/d 40,02,100
Share First and Final 7,99,200
Call
Share Capital 3,600
41,02,100 41,02,100

Page 66 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Page : 69 , Block Name : Numerical answers

Q20 Ashoka Limited Company which had issued equity shares of Rs 20 each at a discount of
Rs 4 per share, forfeited 1,000 shares for non-payment of final call of Rs 4 per share. 400 of the
forfeited shares are reissued at Rs 14 per share out of the remaining shares of 200 shares
reissued at Rs 20 per share. Give journal entries for the forfeiture and reissue of shares and
show the amount transferred to capital reserve and the balance in Share Forfeiture Account.
Answer.
In the Books of Ashoka Limited
Journal
Date Particulars L.F. Debit Credit
Amount Amount
Rs Rs
Share Capital A/c Dr. 20,000
To Final Call A/c 4,000
To Share Discount A/c 4,000
To Share Forfeiture A/c 12,000
(1,000 Shares of 20 per share forfeited for nonpayment of
Share Final
Call money @ Rs 4 per share)

Bank A/c (400×14) Dr. 5,600
Discount on Issue of Shares A/c (400×4) Dr. 1,600
Share Forfeiture A/c (400×2) Dr. 800
To Share Capital A/c 8,000
(400 shares @ Rs 20 per share reissued for Rs 14 per share
fully
paid-up)

Bank A/c Dr. 4,000
To Share Capital A/c 4,000
(200 shares @ 20 per share reissued for Rs 20 per share
fully

Page 67 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

paid-up)

Share Forfeiture A/c Dr. 6,400
To Capital Reserve 6,400
(Balance of 600 shares in Share Forfeiture Account transferred
to
Capital Reserve Account, after reissue)

Balance in Share Forfeiture Account (12,000 – 800 – 6,400) = Rs 4,800
Working Notes:
For 400 Shares

Share Forfeiture Account credited Rs 12 per share

Less: Share Forfeiture Account debited Rs 2 per share

Amount transferred to Capital Reserve Account, after adjustment Rs 10 per share

Amount of 400 shares transferred to Capital Reserve Account, after reissue
= 400 Shares @ Rs 10 per share
= Rs 4,000
For 200 Shares

Share Forfeiture Account credited Rs 12 per share

Less: Share Forfeiture Account debited Nil

Amount transferred to Capital Reserve Account, after adjustment Rs 12 per share

Amount of 200 shares transferred to Capital Reserve Account, after reissue
= 200 Shares @ Rs 12 per share
= Rs 2,400

Total amount transferred to Capital Reserve = Capital Reserve for 200 shares + Capital
Account for 600 shares Reserve for 200 shares

Page 68 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

= 4,000 + 2,400

= Rs 6,400

Page : 70 , Block Name : Numerical answers

Q21 Amit holds 100 shares of Rs 10 each on which he has paid Re.1 per share as application
money. Bimal holds 200 shares of Rs 10 each on which he has paid Re.1 and Rs 2 per share as
application and allotment money, respectively. Chetan holds 300 shares of Rs 10 each and has
paid Re.1 on application, Rs 2 on allotment and Rs 3 for the first call. They all fail to pay their
arrears and the second call of Rs 2 per share and the directors, therefore, forfeited their shares.
The shares are reissued subsequently for Rs 11 per share as fully paid. Journalise the
transactions.
Answer.

Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Capital A/c (600×8) Dr. 4,800
To Share Allotment (100×2) 200
To Share First Call A/c (300×3) 900
To Share Second Call A/c (600×2) 1,200
To Share Forfeiture A/c 2,500
(600 shares @ Rs 10 per share Rs 8 called-up forfeited
after
making Second Call)

Bank A/c Dr. 6,600
To Share Capital A/c 6,000
To Securities Premium A/c 600
(600 shares @ Rs 10 each for Rs 11 per share fully
paid-up
reissued)

Share Forfeiture A/c Dr. 2,500

Page 69 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Capital Reserve A/c 2,500
(Balance of Share Forfeiture Account transferred to
Capital
Reserve Account after reissue)

Working Notes:

Share Forfeiture Account credited
Amit (100×1) = 100
Bimal (200×3) = 600
Chetan (300×6) = 1,800
2,500

Page : 70 , Block Name : Numerical answers

Q22 Ajanta Company Limited having a normal capital of Rs 3,00,000, divided into shares of Rs
10 each offered for public subscription of 20,000 shares payable at Rs 2 on application; Rs 3 on
allotment and the balance in two calls of Rs 2.50 each. Applications were received by the
company for 24,000 shares. Applications for 20,000 shares were accepted in full and the shares
allotted. Applications for the remaining shares were rejected and the application money was
refunded.
All moneys due were received with the exception of the final call on 600 shares which were
forfeited after legal formalities were fulfilled. 400 shares of the forfeited shares were reissued at
Rs 9 per share.
Record necessary journal entries and prepare the balance Sheet showing the amount
transferred to capital reserve and the balance in Share forfeiture account.
Answer.
In the Books of Ajanta Company Limited
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs

Page 70 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Bank A/c Dr. 48,000
To Share Application A/c 48,000
(Share Application money received for 24,000 shares @
Rs 2 per share)

Share Application A/c Dr. 48,000
To Share Capital A/c 40,000
To Bank A/c 8,000
(Share Application @ Rs 2 per share for 20,000 shares
transferred to Share Capital and remaining for 4,000
shares rejected)

Share Allotment A/c Dr. 60,000
To Share Capital A/c 60,000
(Share Allotment money due @ Rs 3 per share on
20,000 shares )

Bank A/c Dr. 60,000
To Share Allotment A/c 60,000
(Share Allotment money received for 20,000 shares @
Rs 3
per share)

Share First Call A/c Dr. 50,000
To Share Capital A/c 50,000
(Share First Call money due on 20,000 Shares @
Rs 2.5 per share)

Bank A/c Dr. 50,000
To Share First Call A/c 50,000
(Share First Call money received for 20,000 shares
@ Rs 2.5 per share)

Page 71 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Share Final Call A/c Dr.
To Share Capital A/c
(Share Final Call money due on 20,000 Shares @
Rs 2.5 per share)

Bank A/c Dr. 48,500
Calls in Arrears A/c Dr. 1,500
To Share Final Call A/c 50,000
(Share Final Call money received for 19,400 shares @
Rs 2.5 per share except 600 shares)

Share Capital A/c Dr. 6,000
To Calls in Arrears A/c 1,500
To Share Forfeiture A/c 4,500
(600 Shares forfeited @ Rs 10 each for the non-payment
of Share
Final Call @ Rs 2.5 per share)

Bank A/c Dr. 3,600
Share Forfeiture A/c Dr. 400
To Share Capital A/c 4,000
(400 shares @ Rs 10 each for Rs 9 per share
reissued)

Share Forfeiture Account Dr. 2,600
To Capital Reserve A/c 2,600
(After reissue balance of 400 shares in Forfeiture
Account transferred to Capital Reserve Account)

Ajanta Company Limited
Balance Sheet

Page 72 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Note Amount
Particulars
No. (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital 1 1,99,500
b. Reserves and Surplus 2 2,600
2. Non-Current Liabilities
3. Current Liabilities
Total 2,02,100

II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents 3 2,02,100
Total 2,02,100

NOTES TO ACCOUNTS

Amount
Note No. Particulars
(Rs)
1 Share Capital
Authorised Share Capital
30,000 shares of Rs 10 each 3,00,000
Issued Share Capital
20,000 shares of Rs 10 each 2,00,000
Subscribed, Called-up and Paid-up Share Capital
19,800 shares of Rs 10 each 1,98,000
Add: Shares Forfeiture 1,500 1,99,500

2 Reserves and Surplus
Capital Reserve 2,600

Page 73 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

3 Cash and Cash Equivalents
Cash at Bank 2,02,100

Working Note:

Share Forfeiture Account credited Rs 7.5 per
share

Less: Share Forfeiture Account debited Rs1 per share

Amount transferred to Capital Reserve Account, after Rs 6.5 per
adjustment share

Amount of 400 shares transferred to Capital Reserve Account, after reissue = 400 Shares @ Rs
6.5 per share = Rs 2,600

Page : 70 , Block Name : Numerical answers

Q23 Journalise the following transaction in the books Bhushan Oil Ltd:
(a) 200 shares of Rs 100 each issued at a discount of Rs 10 were forfeited for the non payment
of allotment money of Rs 50 per share. The first and final call of Rs 20 per share on these share
were not made. The forfeited share were reissued at Rs 70 per share as fully paid-up.
(b) 150 shares of Rs 10 each issued at a premium of Rs 4 per share payable with allotment
were forfeited for non-payment of allotment money of Rs 8 per share including premium. The
first and final call of Rs 4 per share were not made. The forfeited share were reissued at Rs 15
per share fully paid-up.
(c) 400 share of Rs 50 each issued at par were forfeited for non-payment of final call of Rs 10
per share. These share were reissued at Rs 45 per share fully paid-up.
Answer.
Case (a) Books of Bhushan Oil Ltd.
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Capital A/c Dr. 16,000
To Share Allotment A/c 10,000
To Share Forfeiture A/c 4,000

Page 74 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

To Discount on Issue of Shares 2,000
(200 shares forfeited @ Rs 100 each issued at a
discount of
Rs 10 for the nonpayment of allotment money Rs 50 per
share)

Bank A/c Dr. 14,000
Discount on Issue of Shares Dr. 2,000
Share Forfeiture A/c Dr. 4,000
To Share Capital A/c 20,000
(200 shares reissued @ Rs 70 per share fully paid-
up)

Case (b)
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Capital A/c Dr. 900
Securities Premium A/c Dr. 600
To Share Allotment A/c 1,200
To Share Forfeiture A/c 300
(150 shares @ Rs 10 each forfeited for nonpayment of
allotment
money Rs 8 per share including premium Rs 4)

Bank A/c Dr. 2,250
To Share Capital A/c 1,500
To Securities Premium A/c 750
(150 shares @ Rs 10 each reissued For Rs 15 per share
fully

Page 75 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

paid-up)

Share Forfeiture A/c Dr. 300
To Capital Reserve A/c 300
(Balance of Share Forfeiture Account transferred to Capital
Reserve Account)

Case (c)
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Share Capital A/c Dr. 20,000
To Share Final Call A/c 4,000
To Share Forfeiture A/c 16,000
(400 shares @ Rs 50 per share forfeited for nonpayment of
Final
Call Rs 10 per share)

Bank A/c Dr. 18,000
Share forfeiture A/c Dr. 2,000
To Share Capital A/c 20,000
(400 shares @ Rs 50 each reissued for Rs 45 fully
paid-up)

Share Forfeiture A/c Dr. 14,000
To Capital Reserve A/c 14,000
(Balance in Share Forfeiture Account transferred to Capital
Reserve Account)

Page 76 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

Page : 70 , Block Name : Numerical answers

Q24 Amisha Ltd inviting application for 40,000 shares of Rs 100 each at a premium of Rs 20 per
share payable; on application Rs 40 ; on allotment Rs 40 (Including premium): on first call Rs 25
and Second and final call Rs 15.
Application were received for 50,000 shares and allotment was made on pro-rata basis. Excess
money on application was adjusted on sums due on allotment.
Rohit to whom 600 shares were allotted failed to pay the allotment money and his shares were
forfeited after allotment. Ashmita, who applied for 1,000 shares failed to pay the
Two calls and his shares were forfeited after the second call. Of the shares forfeited, 1,200
shares were sold to Kapil for Rs 85 per share as fully paid, the whole of Rohit’s shares being
included.
Record necessary journal entries.
Answer.
In the Books of Amisha Ltd.
Journal
Debit Credit
Date Particulars L.F. Amount Amount
Rs Rs
Bank A/c Dr. 20,00,000
To Share Application A/c 20,00,000
(Share Application money received on 50,000 shares @
40 per share)
Share Application A/c Dr. 20,00,000
To Share Capital A/c 16,00,000
To Share Allotment A/c 4,00,000
(Share Application money adjusted)
Share Allotment A/c Dr. 16,00,000
To Share Capital A/c 8,00,000
To Share Premium A/c 8,00,000
(Share Allotment money due including premium)
Bank A/c Dr. 11,82,000
To Share Allotment A/c 11,82,000

Page 77 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

(Share Allotment money received except 600
shares)
Share Capital A/c Dr. 36,000
Share premium A/c Dr. 12,000
To Share Allotment A/c 18,000
To Share Forfeiture A/c 30,000
(600 shares forfeited after allotment)
Share First Call A/c Dr. 9,85,000
To Share Capital 9,85,000
(First Call money in due on 39,400 shares)
Bank A/c Dr. 9,65,000
To Share First Call A/c 9,65,000
(First Call money received except 800
shares)
Share Second and Final Call A/c Dr. 5,91,000
To Share Capital A/c 5,91,000
(Second and Final Call money due on
39,400 shares)
Bank A/c Dr. 5,79,000
To Share Second and Final Call A/c 5,79,000
(Second and Final Call money received
except 800 shares)
Share Capital A/c Dr. 80,000
To Share First Call A/c 20,000
To Share Second & Final Call A/c 12,000
To Share Forfeiture A/c 48,000
(800 share forfeited)
Bank A/c Dr. 1,02,000
Share Forfeiture A/c Dr. 18,000
To Share Capital A/c 1,20,000
(Forfeited shares reissued 1,200 @ 85 per

Page 78 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

share)
Share Forfeiture A/c Dr. 48,000
To Capital Reserve A/c 48,000
(Profit on 1,200 reissued shares are transfer
to capital reserve
account)

Cash Book (Bank Column)
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
Rs Rs
Share Application 20,00,000 Balance c/d 48,28,000
Share Allotment 11,82,000
Share First Call 9,65,000
Share Final Call 5,79,000
Share Capital 1,02,000
48,28,000 48,28,000

Working Notes:
2. Call in arrears by Rohit on allotment

Money received on Application (750×40) = 30,000
Less: Amount adjusted on Application (600×40) = 24,000
Amount adjusted on Allotment 6,000

3.

Money due on Allotment (600×40) 24,000
Money adjusted 6,000
Balance due on Allotment 18,000

4. Number of shares alloted to Ashmita

Page 79 of 80 Aglasem Schools

Book Name : Accountancy-II Ncert Solutions | Chapter-1 Accountancy

= Total number of alloted shares × number of shares applied
Total number of applied shares
= 40000 /50000 × 1000 = 800 shares
5. Profit on the forfeiture of 600 share of Rohit = Rs 30,000
Profit on the forfeiture of 600 share of Ashmita = Rs 36,000

Profit on forfeiture of 1200 shares (30,000 + 36,000) = 66,000
Less: Loss on reissue of shares = 18,000
Transfer to Capital Reserve = 48,000

6. Balance in Share Forfeiture Account (48,000 – 36,000) = Rs 12,000

Page : 71 , Block Name : Numerical answers

Page 80 of 80 Aglasem Schools