Accounting for share Capital Test

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Accounting for share Capital Test - 33

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Weekly Quiz Competition

Question 1
1 / -0

On a share of $$Rs. 100$$ issued at a premium of $$Rs. 10$$ the whole amount has been called up but one of the shareholders has paid only $$Rs. 80$$. Such shares were forfeited. To record this, the Share Forfeiture a/c would be credited by ________.

A
$$Rs. 80$$

B
$$Rs. 20$$

C
$$Rs. 30$$

D
$$Rs. 70$$

Solution

To record the given transaction, the following journal entry will be made:
=> Share Capital A/c 100
To Calls in arrears 30
To Share Forfeiture A/c 70
Here, the total paid up amount of Rs. 80 represents Rs. 70 paid up on capital and Rs. 10 securities premium. Such premium amount, since received, will not be cancelled by the issuing company.
Question 2
1 / -0

On re-issue of forfeited shares issued at ______________.

A
discount A/c can be re-debited (equal to initial discount at the time of allotment)

B
discount A/c can be credited (equal to initial discount at the time of allotment)

C
share forfeited A/c to be debited (equal to initial discount at the time of allotment)

D
share forfeited A/c to be debited (equal to total discount)
Question 3
1 / -0

Ashok was issued $$300$$ shares of $$Rs. 10$$ each issued at a discount of $$10$$%. He paid $$Rs. 2$$ on application and failed to pay allotment money $$Rs. 3$$. Subsequently his shares were forfeited. The accounting entry of forfeiture would be ________.

A
Share capital debit $$Rs. 1500$$, credit share Forfeited A/c $$Rs. 600$$, Share Allotment A/c $$Rs. 900$$

B
Share capital debit $$Rs. 1800$$, credit share Forfeited A/c $$Rs. 60$$, Share Allotment A/c $$Rs. 1200$$

C
Share capital debit $$Rs. 1800$$, credit Share Forfeited A/c $$Rs. 600$$, Share Allotment A/c $$Rs. 900$$, Discount A/c $$Rs. 300$$

D
Share capital debit $$Rs. 1500$$, credit Share Forfeited A/c $$Rs. 600$$, Share Allotment A/c $$Rs. 60$$, Discount A/c $$Rs. 300$$

Solution
Question 4
1 / -0

Pritam was issued $$500$$ shares of $$Rs. 10$$ each issued at a premium of $$10$$%. He paid $$Rs. 2$$ on application and failed to pay allotment money of $$Rs. 4$$ (including premium). Subsequently his shares were forfeited. The accounting entry of forfeiture would be __________.

A
Debit Share capital A/c $$Rs. 2500$$, debit Securities Premium A/c $$Rs. 500$$, credit Share Forfeiture A/c $$Rs. 1000$$, credit Share Allotment A/c $$Rs. 2000$$.

B
Debit Share Capital A/c $$Rs. 3000$$, Credit Share Allotment A/c $$Rs. 2000$$, Share Forfeited A/c $$Rs. 1000$$.

C
Debit Share Capital A/c $$Rs. 3000$$, Credit Share Allotment A/c $$Rs. 2500$$, Share Forfeited A/c $$Rs. 50$$.

D
Debit Share Capital A/c $$Rs. 3000$$, Credit Share Allotment A/c $$Rs. 1500$$, Share Forfeited A/c $$Rs. 1500$$.

Solution

The following accounting entry will be made:
=> Share Capital A/c Dr. 2,500 (Rs. 5 x 500 shares)
Securities Premium A/c Dr. 500 (Rs. 1 x 500 shares)
To Share Allotment A/c 2,000 (Rs. 4 x 500 shares)
To Share Forfeiture A/c 1,000 (Rs. 2 x 500 shares)
Question 5
1 / -0

After re-issue of forfeited shares the balance in forfeited shares a/c is transferred to ________________.

A
capital reserve a/c

B
reserve capital a/c

C
goodwill a/c

D
general reserve a/c
Question 6
1 / -0

X was issued $$500$$ shares of ABC Ltd. at $$RS. 12$$ including $$Rs. 2$$ premium. He paid only application money of $$Rs. 3$$ and failed to pay the allotment money of $$Rs. 4$$ including premium. Consequently his shares were forfeited. Y was allotted $$400$$ shares he paid $$Rs. 3$$ on application, $$Rs. 4$$ at the time of allotment and failed to pay the call money of $$Rs. 5$$. His shares were also subsequently forfeited. The company subsequently re-issued $$800$$ shares at $$Rs. 8$$ fully paid up as $$Rs. 10$$. Find the amount to be transferred to Capital reserve A/c on re-issue of $$800$$ forfeited shares.

A
$$Rs. 1500$$

B
$$Rs, 1200$$

C
$$Rs, 1400$$

D
$$Rs. 900$$
Question 7
1 / -0

From the following details calculate the number of equity shares of Rs. $$10$$ each to be issued in order to redeem the preference shares.
$$12\%$$ $$(20000)$$ Redeemable preference shares of Rs. $$10$$ each $$=$$ Rs. $$200,000$$
Security premium A/c $$=$$ Rs. $$20,000$$
General Reserve A/c $$=$$ Rs. $$15,000$$
Profit and loss A/c $$=$$ Rs. $$30,000$$
Redeemable preference shares are to be redeemed at $$10\%$$ premium.

A
$$19,000$$

B
$$15,500$$

C
$$18,000$$

D
$$11,000$$
Question 8
1 / -0

A company's balance sheet shows the following information:
Outstanding Redeemable Preference Shares Rs. $$200,000$$
Premium on redemption $$10\%$$
Divisible profit available Rs. $$100,000$$
Security Premium A/c Rs. $$15,000$$
Fresh issue to be made at a discount of $$10\%$$
The face value of fresh issue of shares will be ___________.

A
Rs. $$100,000$$

B
Rs. $$1,16,670$$

C
Rs. $$90,000$$

D
Rs. $$115,500$$
Question 9
1 / -0

Which of the following is odd one?

A
Writing of preliminary expenses

B
Payment of dividend

C
Writing off discount on issue of shares

D
Writing off commission paid on issue of shares/debentures

Solution

A dividend payment is the distribution of a company's profits to its shareholders hence, it is appropriation against profit while writing off preliminary expenses, writing off discount on issue of shares and writing off commission paid on issue of shares/ debentures are charge against profits.
Therefore, B is the correct option.
Question 10
1 / -0

Rohan Industries Ltd. purchased a plant from Hind Industries for Rs. $$12,00,000$$. The company paid Rs. $$4,00,000$$ in cash and agreed to allot $$10\%$$ redeemable preference shares of Rs. $$100$$ each at a premium of $$25\%$$ for the balance amount. How many preference shares will be issued to the vendor if the shares are allotted at $$10\%$$ discount?

A
$$8,889$$

B
$$7,000$$

C
$$6,900$$

D
$$8,080$$

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Accounting for share Capital Test - 33

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Accounting for share Capital Test - 33

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Question 1

$$Rs. 80$$

$$Rs. 20$$

$$Rs. 30$$

$$Rs. 70$$

Solution

Question 2

discount A/c can be re-debited (equal to initial discount at the time of allotment)

discount A/c can be credited (equal to initial discount at the time of allotment)

share forfeited A/c to be debited (equal to initial discount at the time of allotment)

share forfeited A/c to be debited (equal to total discount)

Question 3

Share capital debit $$Rs. 1500$$, credit share Forfeited A/c $$Rs. 600$$, Share Allotment A/c $$Rs. 900$$

Share capital debit $$Rs. 1800$$, credit share Forfeited A/c $$Rs. 60$$, Share Allotment A/c $$Rs. 1200$$

Share capital debit $$Rs. 1800$$, credit Share Forfeited A/c $$Rs. 600$$, Share Allotment A/c $$Rs. 900$$, Discount A/c $$Rs. 300$$

Share capital debit $$Rs. 1500$$, credit Share Forfeited A/c $$Rs. 600$$, Share Allotment A/c $$Rs. 60$$, Discount A/c $$Rs. 300$$

Solution

Question 4

Debit Share capital A/c $$Rs. 2500$$, debit Securities Premium A/c $$Rs. 500$$, credit Share Forfeiture A/c $$Rs. 1000$$, credit Share Allotment A/c $$Rs. 2000$$.

Debit Share Capital A/c $$Rs. 3000$$, Credit Share Allotment A/c $$Rs. 2000$$, Share Forfeited A/c $$Rs. 1000$$.

Debit Share Capital A/c $$Rs. 3000$$, Credit Share Allotment A/c $$Rs. 2500$$, Share Forfeited A/c $$Rs. 50$$.

Debit Share Capital A/c $$Rs. 3000$$, Credit Share Allotment A/c $$Rs. 1500$$, Share Forfeited A/c $$Rs. 1500$$.

Solution

Question 5

capital reserve a/c

reserve capital a/c

goodwill a/c

general reserve a/c

Question 6

$$Rs. 1500$$

$$Rs, 1200$$

$$Rs, 1400$$

$$Rs. 900$$

Question 7

$$19,000$$

$$15,500$$

$$18,000$$

$$11,000$$

Question 8

Rs. $$100,000$$

Rs. $$1,16,670$$

Rs. $$90,000$$

Rs. $$115,500$$

Question 9

Writing of preliminary expenses

Payment of dividend

Writing off discount on issue of shares

Writing off commission paid on issue of shares/debentures

Solution

Question 10

$$8,889$$

$$7,000$$

$$6,900$$

$$8,080$$

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