Issue of shares

1.ABC ltd. is registered with a share capital of Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each
payable as follows
On application Rs. 2
On allotment Rs. 3
On First call Rs. 2
On final call Rs. 3
All the shares were subscribed and all the money were received . pass necessary journal entries .
2.Modern company issued 50,000 shares of Rs. 10each payable as follows
On application Rs. 2
On allotment Rs. 3
On First call Rs. 2
On final call Rs. 3
60,000 share applications were received . The excess application were rejected and money was refunded.
Give journal entries
3.Abc ltd. make an issue of 20,000sharees of Rs. 10 each payable as follows
On application Rs. 3
On allotment Rs. 2
On First call Rs. 3
On final call Rs. 2
30,000 share applications were received . a pro rata allotment was made and the excess application money
was adjusted towards allotment. Give journal entries
4.Spencer company issued 2,00,000equity shares of Rs. 10 each at Rs. 13 per share payable as
follows
On application Rs. 4
On allotment Rs. 5( including premium)
On First call Rs. 2
On final call Rs. 2
All shares were subscribed and all the moneys were duly received. Pass necessary journal entries.
5.Ever shine company issued 50,000equity shares of Rs. 10 each payable as follows
On application Rs. 2
On allotment Rs. 2
On First call Rs. 3
On final call Rs. 3
All shares were subscribed and Allotted. Anand to whom 500 shares were allotted paid the whole of the sum
due along with allotment . Pass necessary journal entries.
6.CC Limited invited applications for 1,00,000 shares of rupees 10 each payable as follows
on application rupees 2 per share
on allotment rupees 3 per share
on first call rupees 2 per share
on final call rupees 3 per share
Applications were received for 1,50,000 shares. 30,000 applications where rejected and pro-rata allotment
was made to the rest. application money in respect of rejected applications are to be refunded but the excess
application money received from those to whom Pro Rata allotment was made to be adjusted against the
allotment money due from them. Directors made all the calls and the amount received in time except first
and final call on 2000 shares. Give journal entries in the books of the company .
Forfeiture and reissue of shares
7..Star Ltd. Invited application for 1,00,000 shares of Rs, 10 Each payable as follows
On application Rs. 2
On allotment Rs. 3
On First call Rs. 2
On final call Rs. 3
All the shares were Applied for and money were received except the first and final call for 2,000 shares .The
shares were forfeited and reissued at Rs. 8per share . Give journal entries.
8.Pass journal entries
1. A ltd. Forfeited 400 shares of Mr. X of Rs. 10 each fully called up for the nonpayment
 of final call of Rs. 2 per share and reissued to Mr. P as fully paid for Rs. 10 each.
2. A ltd. Forfeited 500 shares of Mr. X of Rs. 10 each fully called up for the nonpayment
of final call of Rs. 2 per share and All these shares were reissued to Mr. P as fully paid for Rs. 8
each.
3. A ltd. Forfeited 800 shares of Mr. X of Rs. 10 each fully called up ,on which the holder has paid only
the application money of Rs. 3 per share. Out of these,800 shares were reissued at Rs. 11 per share
fully paid.
9.S Ltd. Issued 50,000 shares of Rs, 10 at a premium of Rs. 2 per share Each payable as follows
On application Rs. 2
On allotment Rs. 5( including premium)
On First &final call Rs. 5
Applications were received for 80,000 shares . 20,000 shares were rejected and application money was
refunded. Allotment was made prorate and money overpaid on application was applied towards amount due
on allotment.
Mr. A to whom 1000 shares were allotted failed to pay the call money. His shares were forfeited. Subsequently
these shares were reissued At Rs. 8 per share
MODULE-II
REDEMPTION OF PREFERENCE SHARES
1.Tata Chemicals Ltd. Had 2000 redeemable preference shares of Rs, 100 each fully paid up . The company has
Rs. 80,000 in its reserve fund. The company issued necessary equity shares at Rs. 10 each for the specific
purpose of redemption . Give JE for redemption of shares.(Jayan sir)

2.The directors of Mudra ltd. was decided to redeem 12000 7% preference shares of Rs. 100
each at a premium of 10% .The company decided to issue new equity shares to the minimum extent after
utilizing following reserves,
General reserve 3,20,000
P&L account 80,000
Securities premium 80,000
Show JE(Jayan sir)

3.JK ltd. Has redeemable preference share capital of Rs. 8,00,000 in 10,000 preference shares of rs. 100 each Rs,
80 paid up. It is resolved to redeem the shares at a premium of 20%after completing all legal formalities. The
company make the following issues :
1)50,000 equity shares of Rs. 10 each at premium of 10%
2)2,000 12 % debentures Of Rs. 100 Each..
The company has credit balance in P&L account Rs. 4,00,000, general reserve Rs. 6,00,000 and securities
premium Rs.2,00,000. Give JE for redemption. (Jayan sir)
4.Balance Sheet of ABC Ltd. As on 31st march 2018 was as follows
Balance sheet
Particulars Note Amount
No.
Equity and liabilities:
1)Shareholders fund
1,00,000equity shares@10 each 10,00,000
50,000 preference shares@10each Rs. 8 paid 4,00,000
2)Reserves &Surplus
P&L account 2,90,000
3) Non Current liabilities --
4)Current liabilities
Trade payables 2,10,000
Total 19,00,000
Assets
1)Non current assets
Fixed assets –Tangible 14,00.000
Noncurrent investments 1,50,000
1)current assets
 Cash and cash equivalents 3,50,000
Total 19,00,000

On the above date ,Directors gave notice to redeem the preference shares at premium of5%. In order to
provide cash towards redemption all investments were sold for rs. 1,25,000. Directors desire that minimum
number of fresh issue were made par . ShowJE (Jayan sir)
5.The balance sheet of Young Turk Ltd. As on 31st december2017 was as follows
Liabilities Amount Assets Amount
Issued share capital: Plant & Machinery 2,00,000
10,000 6% redeemable cumulative Land and building 1,50,000
preference shares of Rs. 10 each Stock 2,50,000
fully paid 1,00,000 Debtor 1,80,000
50,000 Equity shares of Rs.10 Balance at Bank 2,60,000
each fully paid 5,00,000
Profit &Loss Account 2,30,000
General reserve 90,000
8%debentures 50,000
Sundry Creditors 70,000

10,40,000 10,40,00
========== 0
=========
The directors of the company decided to
1) redeem preference shares @ 5% premium
2) to redeem debentures @ premium of 10%
3) to make a bonus issue to the equity share holders of one share for every five shares held in order to
capitalize a part of undistributed profit. Give JE and prepare new balance sheet .. (Jayan sir)
7.A company has 10,000 11% redeemable preference shares of Rs.100 each fully paid. The company decides to
redeem the shares at par. For the purpose it issues 50,000 equity shares of Rs.10 each and the balance is made
available from the accumulated profit . The issue was fully subscribed and all the amount were received . The
redemption was duly carried out .Give journal entries.

8.A company wishes to redeem its preference shares amounting to Rs.1,00,000 at a premium of 5% and for this
purpose issues 5,000 equity shares of Rs10 each at a premium of 5%. The company has also a balance of
Rs.1,00,000 on general reserve and Rs.50,000 on Profit & Loss Account .Give journal entries to record the
transactions .
9.A company has 1,00,000 10% redeemable preference shares of Rs. 10 each fully paid. The company decides to
redeem the shares at par . for the purpose it issues 50,000 equity shares at Rs. 10 each at a discount of
5% , ,Rs. 3,00,000 is made available out of profit and the balance is made available out of general reserve .
The issue was fully subscribed and all amount were received . the redemption was duly carried out. Give
journal entries.
10 X Ltd . has redeemable preference share capital of Rs. 8,00,000 in 10,000 Preference shares of
Rs 10 each Rs.80 paid . It is resolved to redeem the shares at a premium of 20% after fulfilling the
formalities . the company makes the following issues :
50,000 equity shares of Rs.10 each at a premium of 50% and
2000 15%debentures of Rs. 100 each
The company has a credit balance in P&L account Rs.3, 00,000 and General reserve Rs. 4,00,000 and
Securities premium Rs.2,00,000. Give journal entries required on implementing the scheme.

BUYBACK OF SHARES

1.Mummy and me Ltd. Passed a special resolution to buy back 40,000 of its fully paid equity shares of Rs.
10 each at Rs. 13 per share . For this purpose it issued 15,000 7% preference shares of Rs. 10 each at par ,
 the entire amount being payable with application .The Company uses Rs. 50,000 of its balances in
securities premium and the balance from general reserve . The company has sufficient free reserves.

Show JE(Jayan sir)

2.Zee Tele Ltd. Resolved to buyback 50,000 fully paid equity shares of Rs. 10each at par . for this purpose ,
it issued 20,000 12% preference shares of Rs. 10each at par . The company has Rs. 7,00,000 in general
reserve . the buyback expenses amounted to Rs. 10,000 . all legal formalities have been completed pass JE

3. On 31st March 2006 X ltd has an issued capital of Rs.10,00,000 in shares of Rs. 10each fully paid . It has a
General Reserve of Rs.6,00,000. The company resolved to Buyback 10%of the issued shares at Rs. 25 per
shares . Give journal entries

4.A ltd has a capital of Rs. 10,00,000 in 1,00,000 equity shares of Rs. 10 each , of which 25,000 shares were
boughtback @9 per share. The company issued 2,000 6% preference shares of Rs. 100 at Rs. 110 each. The
company had Rs. 1,00,000 in securities premium account and 1,20,000 in general reserve. Give jornal entries

5. The following information have been extracted from the books of Bharathi ltd.

a)2,00,000 equity shares of rs. 10 each

b)2,000 12% preference shares of rs.100 each (issued two months before fir the purpose of buyback)

Capital reserve 15,00,000

Securities premium 17,00,000
General reserve 25,00,000
P&L account 30,00,000
The company resolved to buy back25% of its equity shares at Rs. 50 per share Pass JE assuming that the
company has achieved the target of buyback.(jayan sir)
6. XYZ Ltd decides to buyback 25% of it’s RS. 4 crores paid equity capital . The face value per equity share is
Rs.10 whereas the market price is Rs.25 .XYZ takes the following steps for buyback of it’s shares
i) To issue 14%debentures of Rs. 100 each at par for the face value of Rs. 1 crore at par
ii) To utilize general reserve to the extent required
iii) To sell the investment of Rs. 50,00,000 for Rs.52,00,000
iv) To buyback the shares at market value
Journalize the transactions
7. Zuari ltd resolved to buy back 3,00,000 of its fully paid equity shares of Rs 10 each at Rs 12 per share. For
the purpose it issued 10,000 ten percentage preference shares of Rs 100 each at par, the total sum being
payable with application. The company uses Rs 8,50,000 of its balance in securities premium account
apart from its adequate balance in general reserve account to fulfill the legal requirements regarding buy
back. Pass journal entries for all the transactions involved in buy back.