Accounting for share Capital Test

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Accounting for share Capital Test - 48

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Question 1
1 / -0

Large Ltd. issued 25,000 equity shares of Rs.100 each at a premium of Rs.15 each payable as Rs.25 on application, Rs.40 on allotment and balance in the first call. The applications were received for 75,000 equity shares. The above is the case of ____________.

A
Forfeiture of shares

B
Pro rata allotment

C
Over-subscription

D
Under-subscription

Solution

Over subscription means, Number of application received for subscribing share is more than share available to issue. Here 25000 share is available to issue, but application is received for 75000 share. It is the case of over subscription.
Question 2
1 / -0

Y Ltd. forfeited 300 shares of Rs.10/- each for non-payment of allotment money of Rs.4/- first call and second call of Rs.2/- each. All the shares were re-issued @ Rs.10 paid up. Calculate the amount transferred to capital reserve.

A
800

B
900

C
1,800

D
600

Solution

300 shares of Rs. 10 each & for non - payment of allotment money of Rs. 4 [300 x 4 = 1200]
first & final call of Rs. 2 [300 x 2 = 600]
Capital reserve = 1200 - 600 = 600.
'
Question 3
1 / -0

X Ltd. forfeited 700 shares of Rs. 10 each (9 called up) on which he paid up 7 per share. Out of these 200 shares were re-issued at Rs. 9. Calculate the amount credited to Share Capital A/c at time of re-issued?

A
6,300

B
4,300

C
1,800

D
2,000

Solution

200 shares were re- issued at Rs.9 ( 200 x 9 = 1800)
securities premium of shares 200
so as 1800 +200 = 2,000
shre capital A/c cr 2,000.
Question 4
1 / -0

Company cannot issue shares more than _______________.

A
Authorised Capital

B
Subscribed Capital

C
Issued Capital

D
Paid up Capital

Solution

Authorised share capital - This is also known as registered capital. It is the maximum amount of capital that the limited company is authorised to issue to its shareholders.
Question 5
1 / -0

X failed to pay final call on 24,000 shares Rs.20 per share on 15.12.2013 and paid the same on 15.03.2014. What is the interest of calls in arrears.

A
12,000

B
6,000

C
6,150

D
6,250

Solution

Rate of interest on call in arrears = 5% per annum
Interest = 24000 * 20 * 5% * 3/12 = 6000
Question 6
1 / -0

Pious Limited purchases a machine worth Rs. 1,15,000 from Indigo Traders. Payment was made as Rs. 10,000 by cheque and the remaining by issue of equity shares of the face value of Rs. 10 each fully paid-up at an issue price of Rs. 10.50 each. Amount of share premium would be -

A
Rs. 6,000

B
Rs. 5,000

C
Rs. 7,000

D
Rs. 4,000
Question 7
1 / -0

Total share holding of an investor is known as his/her _____________.

A
Mutual Fund

B
Holding Period

C
Pastfolio

D
Limit order

Solution

Mutual fund shares do not give its holders any voting rights.
Value of the securities in the portfolio by the total amount of shares outstanding. Others are named by their investment approach: aggressive growth.
Question 8
1 / -0

Premium received on re-issue of forfeited share should be ____________.

A
debit to share forfeited A/c

B
credit to share forfeited A/c

C
credit securities premium A/c

D
none of these

Solution

In case of re-issue of of forfeited share on premium the entries would be as follows:
Bank A/c. Dr. (with re-issue price)
To Share Capital A/c. (with the amount called up)
To Securities premium A/c.(with premium amount)
As per the provisions of Companies Act 2013, the amount of premium on fresh issue after redemption, should be credited to securities premium A/c and face value to share capital account.
Question 9
1 / -0

Which of the following statement is not true?

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

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

C
Loss on re-issue of shares adjusted against forfeiture amount.

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

Solution

In case of re-issue of of forfeited share on premium the entries would be as follows:
Bank A/c. --------Dr. (with re-issue price)
To Share Capital A/c. (with the amount called up)
To Securities premium A/c.(with premium amount)

And now the balance in forfeited shares A/c. is basically a capital profit to the company and so it would be transferred to Capital reserve A/c. the entry for the same is as follows:
Shares forfeiture A/c.-------Dr.
To Capital Reserve A/c.
Question 10
1 / -0

When shares are issued at a price less than the face value, they are said to be issued at __________.

A
Discount

B
Premium

C
Par

D
None of above

Solution

Issue of shares at discount: When the shares are issued at a price lower than the face value, they are said to be issued at discount.
Any company could not offer the shares at discount when
• It is a new company
• It is a new class of shares even though of an old company
The discount on issue of shares is treated as a loss of capital nature.
For e.g.
Let the share is issued at Rs. 90 then it is called that share is issued at the discount of Rs 10 (Rs 100 –Rs. 90).

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 48

Result

Accounting for share Capital Test - 48

Score

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Rank

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SHARING IS CARING

Question 1

Forfeiture of shares

Pro rata allotment

Over-subscription

Under-subscription

Solution

Question 2

800

900

1,800

600

Solution

Question 3

6,300

4,300

1,800

2,000

Solution

Question 4

Authorised Capital

Subscribed Capital

Issued Capital

Paid up Capital

Solution

Question 5

12,000

6,000

6,150

6,250

Solution

Question 6

Rs. 6,000

Rs. 5,000

Rs. 7,000

Rs. 4,000

Question 7

Mutual Fund

Holding Period

Pastfolio

Limit order

Solution

Question 8

debit to share forfeited A/c

credit to share forfeited A/c

credit securities premium A/c

none of these

Solution

Question 9

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

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

Loss on re-issue of shares adjusted against forfeiture amount.

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

Solution

Question 10

Discount

Premium

Par

None of above

Solution

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