Accounting for share Capital Test

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Accounting for share Capital Test - 13

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Weekly Quiz Competition

Question 1
1 / -0

A company forfeited $$30$$ equity shares of $$Rs.10$$ each fully called up, for non-payment of allotment money of $$Rs. 4$$ each. If these shares are reissued at $$Rs. 7$$ per share fully paid, the amount transferable to Capital Reserve will be _______________.

A
$$Rs. 300$$

B
$$Rs. 60$$

C
$$Rs. 90$$

D
$$Rs. 30$$
Question 2
1 / -0

Which one of the following statements regarding forfeiture of shares is not correct?

A
Forfeited shares may be reissued at a discount or at a premium

B
The title of the new purchaser is not affected by any irregularity in the forfeiture or sale of the shares

C
Return of allotment of reissued of forfeited shared is filed with the Registrar of Companies

D
Board may consider the request from the defaulting ex-shareholder for the cancellation of forfeiture before the disposal of forfeited shares
Question 3
1 / -0

Which of the following is false?

A
Loss on reissue of shares cannot be more than the gain on forfeiture of those shares.

B
Where all the forfeited shares are not reissued, the share forfeited account will show a credit balance equal to gain on forfeiture of shares not yet issued.

C
When the shares are forfeited, share premium is debited along with share capital where premium has not been received.

D
Where forfeited shares are issued at premium, the amount of such premium is credited to capital reserve account.

Solution

Forfeiture of Shares which are Issued at a Premium: If the premium is already received by the company, it cannot be cancelled even if the shares are forfeited in the future. The securities premium account will be debited with the amount of premium (if not received by the company).
Question 4
1 / -0

A company has issued shares of $$Rs. 10$$ each at a premium of $$Rs. 2$$ each. The whole amount has been called up but shares were forfeited for non-payment of $$Rs. 4$$. On forfeiture share capital account will be debited by _____________.

A
$$Rs. 12$$

B
$$Rs. 10$$

C
$$Rs. 8$$

D
$$Rs. 4$$
Question 5
1 / -0

For which of the following purposes share premium of the company can not be used in case the company issues share at premium?

A
For writing off loss as sale and assets.

B
For the issue of fully paid bonus shares to the members of the company.

C
For writing off preliminary expenses of the company.

D
For providing premium payable on the redemption of any redeemable preferences shares or debentures of the company.
Solution
According to the Section 52(2) of the Companies Act, 2013, following are the purposes of securities premium reserve:
To issue fully paid-up bonus shares to its existing shareholders.
Securities Premium Account can be used for writing off any preliminary expenses of the company.
To write off expenses of issue of shares and debentures, such as commission paid or discount given on the issue of shares.
The balance can also be used to provide for the premium that is payable on the redemption of debentures or of preference shares of the company.
And finally, it can be utilized by the company to buy back its own shares.
Question 6
1 / -0

On the above question, if Shyam had been allotted $$350$$ shares, how many shares he would have applied for?

A
$$300\ shares$$

B
$$400\ shares$$

C
$$420\ shares$$

D
$$425\ shares$$
Question 7
1 / -0

Z Ltd. Forfeited $$20$$ shares of $$Rs. 10$$ each, on which $$Rs. 4$$ per share were paid. What is the minimum price of reissue of these shares are fully paid up?

A
$$Rs. 200$$

B
$$Rs. 120$$

C
$$Rs. 80$$

D
$$Rs. 20$$

Solution

Minimum amount should be the amount which has been not been received on forfeited shares. So, entry will be:
Share capital A/c Dr. (20 x 10) 200
To share forfeited A/c (20 x 4) 80
To share final call A/c (20 x 6) 120
So, minimum amount will be Rs.120.
Question 8
1 / -0

The Authorised Capital ($$Rs. 10$$ per share) of a company is $$Rs. 5$$ lakhs, Issued Capital $$Rs. 3$$ lakhs and Subscribed Capital $$Rs. 2$$ lakhs. It has received $$Rs. 5$$ per share on application and allotment and $$Rs. 2$$ per share on first call except on $$2,500$$ shares, which have not been forfeited. Share Capital A/c is credited by _______________.

A
$$Rs. 3,00,000$$

B
$$Rs. 2,00,000$$

C
$$Rs. 1,40,000$$

D
$$Rs. 1,35,000$$

Solution

Total number of shares subscribed = Subscribed Capital / Nominal value per value
= Rs. 2,00,000 / 10 = Rs. 20,000
Share Capital will be credited by the amount called up on the number of shares susbcribed = 20,000 shares x Rs. (5 + 2) = Rs. 1,40,000
Question 9
1 / -0

A company forfeited $$1,000$$ shares of $$Rs. 10$$ each (which were issued at par) held by Mr. John for non-payment of allotment money of $$Rs. 4$$ per share. The called-up value per share was $$Rs. 9$$. On forfeiture, the amount debited to share capital will be ________________.

A
$$Rs. 5,000$$

B
$$Rs. 4,000$$

C
$$Rs. 1,000$$

D
$$Rs. 9,000$$

Solution

The total amount to be debited to share capital account = called up value x no. of shares forfeited
= Rs. 9 x 1,000 = Rs. 9,000
Question 10
1 / -0

X Ltd. forfeited $$30$$ shares of $$Rs. 10$$ each fully called-up for non-payment of allotment of $$Rs. 3$$ per share and call money of $$Rs. 4$$ per share. These shares are reissued for $$Rs. 8$$ per share fully paid. What is the amount to be transferred to Capital Reserve Account?

A
$$Rs. 300$$

B
$$Rs. 60$$

C
$$Rs. 30$$

D
$$Rs. 90$$

Solution

Total forfeited amount credited= 30x3 = Rs. 90
Total forfeited amount debited= 30x2= Rs. 60
Capital reserve= Credit forfeiture - Debit forfeiture
= Rs. 90 - 60
= Rs. 30
Therefore, C is the correct option.

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 13

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Accounting for share Capital Test - 13

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SHARING IS CARING

Question 1

$$Rs. 300$$

$$Rs. 60$$

$$Rs. 90$$

$$Rs. 30$$

Question 2

Forfeited shares may be reissued at a discount or at a premium

The title of the new purchaser is not affected by any irregularity in the forfeiture or sale of the shares

Return of allotment of reissued of forfeited shared is filed with the Registrar of Companies

Board may consider the request from the defaulting ex-shareholder for the cancellation of forfeiture before the disposal of forfeited shares

Question 3

Loss on reissue of shares cannot be more than the gain on forfeiture of those shares.

Where all the forfeited shares are not reissued, the share forfeited account will show a credit balance equal to gain on forfeiture of shares not yet issued.

When the shares are forfeited, share premium is debited along with share capital where premium has not been received.

Where forfeited shares are issued at premium, the amount of such premium is credited to capital reserve account.

Solution

Question 4

$$Rs. 12$$

$$Rs. 10$$

$$Rs. 8$$

$$Rs. 4$$

Question 5

For writing off loss as sale and assets.

For the issue of fully paid bonus shares to the members of the company.

For writing off preliminary expenses of the company.

For providing premium payable on the redemption of any redeemable preferences shares or debentures of the company.

Solution

Question 6

$$300\ shares$$

$$400\ shares$$

$$420\ shares$$

$$425\ shares$$

Question 7

$$Rs. 200$$

$$Rs. 120$$

$$Rs. 80$$

$$Rs. 20$$

Solution

Question 8

$$Rs. 3,00,000$$

$$Rs. 2,00,000$$

$$Rs. 1,40,000$$

$$Rs. 1,35,000$$

Solution

Question 9

$$Rs. 5,000$$

$$Rs. 4,000$$

$$Rs. 1,000$$

$$Rs. 9,000$$

Solution

Question 10

$$Rs. 300$$

$$Rs. 60$$

$$Rs. 30$$

$$Rs. 90$$

Solution

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