Accounting for share Capital Test

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Accounting for share Capital Test - 54

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Question 1
1 / -0

X Ltd. had allotted 20,000 shares to the applicants of 28,000 shares on pro rata basis. The amount payable on application is Rs 2. Mr. P applied for 840 shares. The number of shares allotted and the amount carded forward for adjustment 840 against allotment money due from Mr. P =?

A
120 shares; Rs 240

B
680 shares; Rs 320

C
640 shares, Rs 400

D
600 shares; Rs 480

Solution

Pro- rata is a situation when amount on excess share is refunded,
$$Shares\quad Alloted\quad =\quad \cfrac { Total\quad shares\quad alloted }{ Total\quad shares\quad applied } \quad \times \quad Share\quad applied\quad by\quad a\quad shareholder$$
Substitute the values in above equation
$$Shares\quad Alloted\quad = \cfrac { 2000\quad shares }{ 2800\quad shares } \times 840\quad shares= 600\quad shares$$
$$Adjustment\quad money= Money\quad on\quad Application - Money\quad to\quad be\quad used\quad up$$
Substitute the values in above equation
$$Adjustment\quad money= Rs2 \times 840 shares - Rs 2 \times 600 shares= Rs\quad 480$$.
Question 2
1 / -0

G Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium (to be paid at the time of allotment) on which first call of Rs 30 per share was not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 called up for Rs 80 per share, the profit on re-issue is-

A
Rs 2,500

B
Rs 2,300

C
Rs 1,500

D
Rs 1,000

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount+Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs20+ Rs30=Rs50$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=50 \times50= Rs2500$$
$$Forfeiture\quad Amount\quad for\quad 20= shares= 200\times 50= Rs1000$$
$$Forfeiture\quad Amount\quad for\quad reissued\quad shares=20=\times 0= Rs0$$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture- Forfeited\quad amount\quad on\quad reissue$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs1000- Rs0= Rs 1000$$
Hence, the profit earned on the reissue of shares is Rs $$1000$$.
Question 3
1 / -0

A Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 paid-up for Rs 90 per share, the Profit on re-issue is ____________.

A
Rs 1,500,

B
Rs 1,300,

C
Rs 900,

D
Rs 600,

E
Rs 400,

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs30$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=50shares \times Rs30= Rs1,500$$
$$Forfeiture\quad Amount\quad for\quad 20shares=20shares \times Rs30=Rs600$$.
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs600- Rs 0= Rs 600$$
Hence, the profit earned on the reissue of shares is Rs $$600$$.
Question 4
1 / -0

CAS Ltd. issued 40,000 shares of Rs 10 each at a premium of 20% on May 01 payable as follows:
On application Rs 4.50 (inclusive of premium)
On allotment Rs 2.50
On first and final call Rs 5.00
Mr. X, to whom 2,000 shares were allotted, has paid Rs 10,000 on June 01. At the time of remitting the allotment money, she indicated that the excess money should be adjusted towards the call money. The directors of the company made the first and final call on October 31. The company has a policy of paying interest on calls-in-advance. The amount of interest paid to Mr. X on calls-in-advance = ?

A
Rs 125

B
Rs 104

C
Rs 250

D
Rs 300

Solution

Mr. X has paid Rs 10,000 as the allotment money on June 01.
$$Money\quad to\quad be\quad paid\quad on\quad allotment= No.\quad of\quad share \times Allotment\quad money$$
Substituting the values in the above equation
$$Money\quad to\quad be\quad paid\quad on\quad allotment= 2000\quad shares \times Rs\quad 2.50=Rs 5,000$$
$$Excess\quad money\quad on\quad allotment= Amount\quad Received- Amount\quad called\quad up$$
Substitute the values in above equation
$$Excess\quad money\quad on\quad allotment=Rs\quad 10,000- Rs\quad 5,000= Rs5,000$$
$$Interest\quad paid\quad on\quad call-in-advance= Excess\quad money\times \cfrac { interest }{ 100 } \times Time\quad period$$
Substitute the values in the above equation
$$Interest\quad paid\quad on\quad call-in-advance\quad =\quad 5000 \times \cfrac { 15 }{ 100 } \times \cfrac { 6 }{ 12 } = Rs 125$$.
Question 5
1 / -0

X Ltd. forfeited 10 shares of Rs 10 each issued at a discount of 10% to Y on which a second & final call of Rs 4 was not yet called and a first call of Rs 4 was not received. 8 of these shares were reissued as Rs 8 called up for Rs 7.50 per share. On forfeiture the Share Capital will be ___________.

A
Debited with Rs 48

B
Credited with Rs 48

C
Debited with Rs 60

D
Credited with Rs 64

Solution

When shares are forfeited the share capital account is debited. $$Share\quad Capital\quad Amount\quad =\quad shares\quad forfeited\quad \times \quad called\quad up\quad value\quad of\quad share\quad capital$$
Substitute the values in above equation
$$Share\quad Capital\quad Amount=10shares \times Rs6= Rs60$$.
Question 6
1 / -0

B Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 called up for Rs 80 per share, the Profit on re-issue is ____________.

A
Rs 1,500,

B
Rs 1,300,

C
Rs 900,

D
Rs 600,

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs30$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=50shares\times Rs30= Rs1,500$$
$$Forfeiture\quad Amount\quad for\quad20shares=20shares\times Rs30=Rs600$$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture-Forfeiture\quad amount\quad on\quad Reissue$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs600- Rs0= Rs 600$$
Hence, the profit earned on the reissue of shares is Rs $$600$$
Share forfeiture a/c Dr. Rs600
To caoital reserve a/c Rs600.
Question 7
1 / -0

Y Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received and the second and final call of Rs 20 per share was not yet called. 20 of these shares were re-issued as Rs 80 paid up for Rs 70 per share.
On forfeiture, the Share Capital Account will be _____________.

A
Debited with Rs 1,600

B
Credited with Rs 1,600

C
Debited with Rs 4,000

D
Credited with Rs 1400

Solution

The share capital is debited when writing the journal entry for forfeiture of shares.
$$Share\quad Capital\quad Amount\quad =\quad No.\quad of\quad shares\quad forfeited\quad \times \quad called\quad up\quad value$$
Substitute the values in above equation
$$Share\quad Capital\quad Amount= 50shares \times Rs80= Rs4,000$$.
Question 8
1 / -0

A limited Company forfeited 100 equity shares of the face value of Rs 10 each, Rs 6 per share called up, for non payment of first call of Rs 2 per share. The forfeited shares were subsequently re-issued as fully paid Rs 7 each. The profit on re-issue is ________.

A
Rs 400,

B
Rs 300,

C
Rs 100,

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$$Forfeiture\quad Amount=Application\quad Amount$$

Substitute the values in above equation

$$Forfeiture\quad Amount=Rs4$$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$

Substitute the values in the above equation

$$Forfeiture\quad Amount=100shares \times Rs4= Rs400$$

$$Forfeiture\quad amount\quad on\quad reissue=100shares \times Rs3=300$$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$

Substitute the values in the above equation

$$Profit\quad on\quad reissue= Rs400-Rs300= Rs100$$

Hence, the profit earned on the reissue of shares is Rs $$100$$.
Question 9
1 / -0

H Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium (to be paid at the time of allotment) on which first call of Rs 30 per share was not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 paid-up for Rs 70 per share, the Profit on re-issue is _________.

A
Rs 2,500,

B
Rs 2,300,

C
Rs 1,500,

D
Rs 800,

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs20 +Rs30= Rs50$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=50 \times50= Rs2500$$
$$Forfeiture\quad Amount\quad for\quad 20\quad shares= 200\times 50= Rs1000$$
$$Forfeiture\quad Amount\quad for\quad reissued\quad shares=20\times 10= Rs200$$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture- Forfeited\quad amount\quad on\quad reissue$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs 1000- Rs 200= Rs 800$$
Hence, the profit earned on the reissue of shares is Rs $$800$$.
Share Forfeiture a/c Dr Rs800
To capital reserve a/c Rs800.
Question 10
1 / -0

Alok Ltd. forfeited 300 shares of Rs 10 each, fully called up, held by Ram for non payment of allotment money of Rs 3 per share and final call money of Rs 4 per share. Out of these shares 250 were re-issued to Shyam for a total payment of Rs 2,000. The profit on re-issue is-

A
Rs 900,

B
Rs 400,

C
Rs 750,

D
Rs 250,

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs3$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=300shares \times Rs3= Rs900$$
$$Forfeiture\quad Amount\quad for\quad 250share= 250shares \times Rs3= Rs750$$
$$Forfeiture\quad amount\quad on\quad reissue=250shares \times Rs2=500$$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue= Rs750-Rs500= Rs250$$
Hence, the profit earned on the reissue of shares is Rs $$250$$.

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 54

Result

Accounting for share Capital Test - 54

Score

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Rank

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SHARING IS CARING

Question 1

120 shares; Rs 240

680 shares; Rs 320

640 shares, Rs 400

600 shares; Rs 480

Solution

Question 2

Rs 2,500

Rs 2,300

Rs 1,500

Rs 1,000

Solution

Question 3

Rs 1,500,

Rs 1,300,

Rs 900,

Rs 600,

Rs 400,

Solution

Question 4

Rs 125

Rs 104

Rs 250

Rs 300

Solution

Question 5

Debited with Rs 48

Credited with Rs 48

Debited with Rs 60

Credited with Rs 64

Solution

Question 6

Rs 1,500,

Rs 1,300,

Rs 900,

Rs 600,

Solution

Question 7

Debited with Rs 1,600

Credited with Rs 1,600

Debited with Rs 4,000

Credited with Rs 1400

Solution

Question 8

Rs 400,

Rs 300,

Rs 100,

None of these

Solution

Question 9

Rs 2,500,

Rs 2,300,

Rs 1,500,

Rs 800,

Solution

Question 10

Rs 900,

Rs 400,

Rs 750,

Rs 250,

Solution

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