CORPORATE ACCOUNTING

CHAPTER 1

ISSUE OF SHARE CAPITAL

X Ltd. Issued 100000 equity shares of Rs. 10 each and 1000 10% preference shares of Rs. 100
each payable as follows.

Equity shares Preference shares

Rs. Rs.

On application 2 20

On allotment 3 30

On first call 3 20

On final call 2 30

All the shares offered were subscribed by the public and cash duly received on all the
installments.

Pass the necessary journal entries.

Problem no:-2

Pass journal entries and prepare ledger accounts to record the following in the books of banglore
perfumery works limited and prepare a balance sheet. The authorized capital is 75000 shares of
Rs. 10 each of which 50000 were issued for subscription.

2009

May 2 Received application for 65000 shares with Rs. 1 per share.

May 18 allotted 50000 shares, Rs. 1 per shares due on allotment.

May 19 returned Rs. 10000 to those not allotted and Rs. 5000 of application money
applied towards allotment due.

June 3 received Rs. 44500 towards allotment.

June 18 made a call of Rs. 2 per share, due July 5.

Problem no;- 3

Ajantha Ltd. Issued 20000 shares of Rs. 10 each payable as follows.

Rs. 2 on application

Rs. 3 on allotment

Rs. 2 on first call

Rs. 3 on final call

All the shares were applied for and allotted, and all the sums were duly received. Pass journal
entries assuming that application account and allotment are combined.

Problem no:-4

The Aruna mills Ltd. With a registered capital of Rs. 500000 in shares of Rs. 10 each, issued
20000 of such shares. Payable Rs. 1 per share on application, Rs. 2 per shares on allotment and
Rs. 3 share on first call.

All the moneys payable on allotment were duly received but on the first call being made, one
shareholder paid the entire balance on his holding of 300 shares and five shareholders with a
total holding of 1000 shares failed to pay the first call on their shares.

Give journal entries to record the transaction and draw up the company’s balance sheet.

Problem no:- 5

Novelties Ltd. Invited applications for 10000 shares of Rs. 100 each payable as follows.

On application Rs. 25

On allotment Rs. 40

On first and final call Rs.35

The applications received were Rs. 9000 shares and all of these were accepted. All moneys dues
were received except the first and final call on 100 shares.

Pass journal entries and prepare the balance sheet.

Problem no;-6

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The Bangalore canning co. Ltd. Issued a prospectus inviting applications for 100000 equity
shares of Rs. 10 each payable as to Rs. 2 on application, Rs. 3 on allotment, Rs. 3 on first call
and Rs. 2 on final call. Application for 120000 shares were received. The directors allotted as
follows.

To application of 8000 shares full allotment.

To application of 30000 shares 20000 shares,

To application of 10000 shares nil.

All the calls were duly made and received.

Give the journal entries to record the above transaction.

Problem no:-7

B Ltd. Issued 20000 shares of Rs. 10 each, payable as to Rs. 3 on application Rs. 3 on allotment
and Rs. 4 on call. Application were received for 36000 shares. Allotment was made by the
company as follows.

Application for 6000 shares were rejected. And their application money was refunded.

Application for 30000 shares were allotted 20000 shares on pro-rata basis, and the excess
application money received from these applicants was adjusted towards the allotment money due
on their shares.

The allotment money and the call money were paid by all the shareholders.

Pass the journal entries in the books of the company.

Problem no :- 8

A Ltd. Issued 30000 shares of Rs. 10 each payable as under.

Rs. 2 on application, payable on 1st January , 2008.

Rs. 3 on allotment, payable on 1st March, 2008.

Rs. 2.50 on first call, payable on 1st June, 2008.

Rs. 2.50 on final call, payable on 1st November 2008.

Application were received for 50000 shares and the allotment were made as under.

To application for 26000 share full

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To application for 18000 shares 4000

To application for 6000 shares nil.

Excess money received on application was utilized towards allotment and subsequent calls.
Interest on calls in advance was paid at 6% per annum.

Journalize the transaction, assuming all sums due were received.

Problem no:-9

Bijapur builders Ltd. made an issue of 30000 shares of Rs. 10 each payable Rs. 3 on application,
Rs. 5 on allotment and Rs. 2 on call.

93200 shares were applied for and owing to heavy over – subscription allotment were made thus.

Applicants for 21500 shares (in respect of application for 2000 or more) received 10200 shares.

Applicants for 50600 shares (in respect of application for 1000 or more but less than 2000)
received 12600 shares.

Applicants for 21100 shares (in respect of application for less than 1000) received 7200 shares.

Cash then received, after satisfying the amount due on application, was applied towards
allotment and call money and balance was then returned. All money due on allotment and call
were realized.

Give journal entries including that of cash and write up the cash account and ledger accounts
relating to issue of shares in the books of the company.

Problem no:- 10

The dharwar draperes ltd. Made an issue of 10,000 shares of Rs.10 each, payable Rs.3 on
application ,Rs.4 on allotment and the balance on call. 43,825 shares were applied for including
an application for 300 shares from a person who paid for for full face value of the share. Owing
to oversubscription., allotments were scaled down as follow:

Application for 11,825 shares (in respect of application for 500 or less) received 5,750 shares
(including the applicant for 300 shares who got 150 shares. Application for 32,000 shares (in
respect of application for 500 shares ) received 4,250 shares.

The amount received were first applied towards allotment and call money (after satisfying
amount due on application, and any balance left was returned.

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You are required to give the cash book, journal and ledger entries to record the above
transactions.

Problem no:- 11

Sugana mills ltd. Issued 10,000 equity shares of Rs 10 each at a premium of Rs. 2 per shares
payable Rs. 2 on application, Rs. 5 on allotment, (including premium) and Rs.5 on first and final
call. The shares were all subscribed and the money received expect the first and final call on
1000 shares.

Give the journal entries, ledger accounts and the balance sheet.

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Problem no;-12

Bellary bus transport Ltd. Issued 100000 new capital dividend into Rs.100 shares at a premium
of Rs.20 per share, payable as follows.

On application Rs. 10 per share

On allotment Rs.40 per share and Rs.10 premium

On final payment Rs.50 per share and Rs.10 premium.

Over payments on application were to be applied towards sum due on allotment and
overpayment on application exceeding sums due on allotment were to be returned. where no
allotment was made. Money to be returned in full. The issue was over-subscribed to the extent of
13000 shares. Applicants for 12000 shares were allotted only 1000 and application for 2000
shares were sent letters of regret and application deposit was returned to them. All the money
due on allotment and call was dully received. Make the necessary entries in the company’s books
to record the transactions.

Problem no:-13

The Mysore sugar Ltd. Issued 20000 equity shares of Rs.100 each at a discount of Rs. 5 per
share. The amount was to be paid as follows

On application Rs.20

On allotment Rs.35

On first and final call Rs.40

All the shares were subscribed and the money duly received except the first and final call on
20000 shares.

Give the journal entries, ledger account and the balance sheet.

Problem no:- 14

The directors of a company with a nominal and subscribed capital of10000 preference shares of
Rs.20 each and 20000 equity shares of Rs. 20 each both of which were fully called up, forfeit
500 preference shares of A on which he failed to pay first and final call of Rs.5 per share each.
They forfeit 1000 equity shares of B who failed to pay Rs.5 per share on allotment, Rs.5 per
share on first call and Rs.5 per share of final call.

Pass the journal entries as to forfeiture and show the capital in the balance sheet..

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Problem no:-15

A Limited company head a subscribed capital of Rs.200000 in share of Rs.10 each fully paid.
With exception of 500 shares of Arun on which Rs.7 per share only had been paid.

These shares were forfeited for no-payment of final call of Rs.3 per share and subsequently re-
issued at Rs.8 per share.

Give the general entries and balance sheet of the company.

Problem no-16

A holds 100 shares of Rs.10 each. On which he paid Rs,1 per share as application money.

B holds 200 shares of Rs. 10 each and has paid Rs.1 and Rs.2 per share as application and
allotment money respectively.

C holds 300 shares of Rs.10 each and has paid Rs1 on application Rs. 2 per share on allotment
and Rs. 3 per share on the first call.

They all fail to pay their arrears and the second call of Rs.3 per share and the directors of the
canara development company Ltd. Forfite their share. These shares are subsequently re-issued to
D for cash at a discount of 10%

The subscribed capital of the company was 6000 equities.

Journalese the transaction involved and represent the share capital in the balance sheet before
and after the re-issue of share.

Problem no-17

The directors of madras Motors Ltd. Resolved on 1st may 2009 that 2000 equity shares of Rs.10
each. Rs. 7.50 paid. Be forfeited for non-payment of final call of Rs. 2.50 on june 10 2009, 1800
of these shares were re-issued at Rs. 6 per share. Give the necessary journal entries.

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Problem no-18

The Vijaya trading co. Ltd. Issued 10000 equity shares of Rs.10 each at a premium of Rs.2 per
share. The amount was payable a follows.

Rs.2 on application Rs.5 On allotment including premium Rs.3 on first call and Rs.2 on final
call.

All the shares were subscribed and the money duly received except the final call on 1000 shares.

The directors forfeited these shares and re-issued them as fully paid at Rs.8 per share.

Give the journal entries and the balance sheet of the company.

Problem no-19

Mohan Ltd. Issued 40000 shares of Rs.10 each at a premium of Rs.2 per share payable as
follows.

On application Rs.2 on allotment Rs.5 (including premium) on first call and final call Rs.5

All the shares were subscribed for and the company received all the money due with the
exception of the allotment money and call money on 800 shares. These shares were forfeited and
re-issued as fully paid at Rs.11 per share,

Pass the necessary journal entry in the books of the company.

Problem no-20

XL co. Ltd. Issued 200000 shares of Rs.10 each at a premium of \Rs.3 each payable Rs.2 on
application Rs.6 on allotment (including premium) Rs 3 on first call and the balance on final call.

Application were received for 225000 shares the directors decided to make pro –rata allotment to
all the application. The excess application money was to be adjusted forward allotment, all the
money were duly received excepting from Mr. Das who failed to pay the first call and also the
final call on 1000 shares Mr. Ravi who failed to pay the final call on 2000 shares`

All the shares were forfeited and re-issued at Rs.9.50

Pass journal entries.

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Problem no-21

On 1st February 2008 the directors of Alpha Ltd. Issued 50000 equity shares of Rs. 10 each at Rs.
12 per share. Payable RS.5 on application (including premium) Rs.4 on allotment and the
balance on may 1 2008.

The lists closed on February 10 2008 by which date application for 70000 shares had been
received. On the cash received Rs. 40000 was returned and Rs. 60000 was applied to the amount
due on allotment the balance of which was paid on February 16 2008. All shareholders paid the
call due on may 1 2008 with the exception of one allottee of 500 shares, these shares were
forfeited on September 29 2008 and re-issued as fully paid Rs. 8 per share on November 1 2008.

Journalese the transaction and show how they will appear in the company’s balance sheet.

SHIVARAJ .M M.com, PGDBA

lecture of commerce and management dept.

Vani govt. first grade college-hiriyur

Contact no: 9164786273, 8971512459