Accounting for share Capital Test

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Accounting for share Capital Test - 56

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Question 1
1 / -0

X Ltd, forfeited 20 shares of Rs 10 each, Rs 7 called up on which Mahesh had paid application and allotment money of Rs 5 per share. Of these 15 shares were re-issued to Naresh as Rs 7 paid-up for Rs 8 per share. The profit on re-issue is ________.

A
Rs 100

B
Rs 80

C
Rs 75

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs5$$
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
$$Forfeiture\quad Amount=20shares \times Rs5= Rs100$$
$$Forfeiture\quad Amount\quad for\quad 15shares=15shares \times Rs5=Rs75$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 15shares\times Rs0\quad = Rs0\\ $$
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
$$Profit\quad on\quad reissue=Rs75-Rs0 = Rs75$$
Hence, the profit earned on the reissue of shares is Rs $$75$$.
Share forfeiture a/c Dr Rs75
To share capital a/c Rs75.
Question 2
1 / -0

Eee Ltd. forfeited 200 shares of Rs 10 each (Rs 8 called up) on which the holder had paid application and allotment money of Rs 5 per share. Out of these 50 shares were re-issued to F as fully paid for Rs 8 per share. The profit on re-issue is ___________.

A
Rs 1000

B
Rs 900

C
Rs 150

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount+Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs5$$
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
$$Forfeiture\quad Amount=200shares \times Rs5= Rs1,000$$
$$Forfeiture\quad Amount\quad on\quad 50shares=\quad 50shares\times Rs5\quad =Rs250$$
$$Forfeiture\quad amount\quad on\quad reissue=50shares \times Rs2=Rs100$$
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
$$Profit\quad on\quad reissue= Rs250-Rs100= Rs150$$
Hence, the profit on the reissue of shares is Rs $$150$$.
Question 3
1 / -0

1000 shares of Rs 10 each issued at par were forfeited for the non payment of the final call of Rs 2 per share. These shares were re-issued @ Rs 8 per share fully paid up. The profit on re-issue is _________.

A
Rs 8,000

B
Rs 6,000

C
Rs 4,000

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount+Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs8$$
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
$$Forfeiture\quad Amount=1000shares\times Rs8= Rs8,000$$
$$Forfeiture\quad amount\quad on\quad reissue=1000sahres \times Rs2=Rs2,000$$
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
$$Profit\quad on\quad reissue= Rs8,000-Rs2,000= Rs6,000$$
Hence, the profit n reissue is Rs $$6,000$$.
Question 4
1 / -0

X limited forfeited 100 shares (Rs 6 called up) issued to Mahesh on which he had paid Rs 2 per share. Out of these 80 shares were reissued at Rs 6 per share to Suresh, Rs 8 paid up. The profit on re-issue is __________.

A
Rs 200

B
Rs 120

C
Rs 80

D
Nil

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

$$Forfeiture\quad Amount=Rs2$$

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$$Forfeiture\quad Amount=100shares \times Rs2= Rs200$$

$$Forfeiture\quad Amount\quad for\quad 80share= 80shares \times Rs2= Rs160$$

$$Forfeiture\quad amount\quad on\quad reissue=80shares \times Rs2=Rs160$$

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

$$Profit\quad on\quad reissue= Rs160-Rs160= Nil$$

Hence, the profit earned on the reissue of shares is $$Nil$$.
Question 5
1 / -0

Dee Ltd. forfeited 160 shares of Rs 10 each on which the holder has paid only the application money of Rs 2 per share. Out of these, 40 shares we re-issued to 'E' as fully paid for Rs 9 per share. The profit on re-issue is _______.

A
Rs 320

B
Rs 160

C
Rs 40

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount+Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs2$$
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
$$Forfeiture\quad Amount=160shares \times Rs2= Rs320$$
$$Forfeiture\quad Amount\quad on\quad 40shares=\quad 40shares\times Rs2\quad =Rs80$$
$$Forfeiture\quad amount\quad on\quad reissue=40shares \times Rs1=Rs40$$
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
$$Profit\quad on\quad reissue= Rs80-Rs40= Rs40$$
Hence, the profit on the reissue of shares is Rs $$40$$.
Question 6
1 / -0

AH Ltd. forfeited 500 shares of Rs 10 each on which first call of Rs 3 per share was not received, the second and final call of Rs 2 per share has not yet been called. Out of these 125 shares were re-issued to I as Rs 8 paid-up for Rs 7 per share. The profit on re-issue is _______.

A
Rs 2,500

B
Rs 2,375

C
Rs 500

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs5$$
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
$$Forfeiture\quad Amount=500shares \times Rs5= Rs2500$$
$$Forfeiture\quad Amount\quad for\quad 125shares=125shares \times Rs5=Rs625$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 125shares\quad \times \quad Rs1\quad = Rs125\\ $$
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
$$Profit\quad on\quad reissue=Rs625-Rs125 = Rs500$$
Hence, the profit earned on the reissue of shares is Rs $$500$$.
Question 7
1 / -0

100 shares of Rs 100 each issued were forfeited for the non payment of allotment money of Rs 50 per share. The first and final call on these shares at Rs 20 per share were not made. The forfeited shares were re-issued for Rs 7,000 fully paid up. The profit on re-issue is-

A
Rs 2,000

B
Rs 1,000

C
Nil

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

$$Forfeiture\quad Amount=Rs30$$

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
$$Forfeiture\quad Amount=100shares \times Rs30= Rs3000$$

$$Forfeiture\quad amount\quad on\quad reissue=100shares \times Rs30=Rs3000$$

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

$$Profit\quad on\quad reissue= Rs3000-Rs3000= Rs0$$

Hence, the profit earned on the reissue of shares is Rs $$0$$.
Question 8
1 / -0

G Ltd. acquired assets worth Rs. $$75,000$$ from H Ltd. By issue of share of Rs. $$10$$ at a premium of Rs. $$5$$. The number of shares to be issued by G Ltd. to settle the purchase consideration _________.

A
$$6,000$$ shares

B
$$7,500$$ shares

C
$$9,375$$ shares

D
$$5,000$$ shares

Solution

Worth of the Assets = Rs.75,000
Share issue price = 10+5 = Rs.15 per share.
Number of shares to be issued = Rs.75,000/15 = 5000 shares.
Question 9
1 / -0

The Amount of capital that is mentioned in capital clause is known as _________.

A
Authorised Capital

B
Registered Capital

C
Nominal Capital

D
All of these

Solution

The amount of capital with which a company is registered is called authorized/registered/nominal capital.
This is the amount of capital which is mentioned in the capital clause of the memorandum of association.
Question 10
1 / -0

MIG Ltd, forfeited 10 shares of Rs 10 each (Rs 6 called up) issued to Mr. Y on which he had paid an application money of Rs 2 per share. Out of these, 8 shares were re-issued to Z as Rs 8 called up for Rs 9 per share. The profit on re-issue is _________.

A
Rs 20

B
Rs 18

C
Rs 16

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs2$$
Forfeiture amount is the money received by the 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
$$Forfeiture\quad Amount=10shares \times Rs2= Rs20$$
$$Forfeiture\quad Amount\quad for\quad 8shares=8shares \times Rs2=Rs16$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 8shares\times Rs0\quad = Rs0\\ $$
The extra 1 rupee paid by the shareholder on the reissue is not considered because it is a part of the security premium, not share forfeiture amount.
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture\quad -\quad Forfeited\quad Amount\quad on\quad Reissue$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs16-Rs0 = Rs16$$
Hence, the profit earned on the reissue of shares is Rs $$16$$.
Share forfeiture a/c Dr. Rs16
To share forfeiture a/c Rs16.

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Accounting for share Capital Test - 56

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Accounting for share Capital Test - 56

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SHARING IS CARING

Question 1

Rs 100

Rs 80

Rs 75

None of these

Solution

Question 2

Rs 1000

Rs 900

Rs 150

None of these

Solution

Question 3

Rs 8,000

Rs 6,000

Rs 4,000

None of these

Solution

Question 4

Rs 200

Rs 120

Rs 80

Nil

Solution

Question 5

Rs 320

Rs 160

Rs 40

None of these

Solution

Question 6

Rs 2,500

Rs 2,375

Rs 500

None of these

Solution

Question 7

Rs 2,000

Rs 1,000

Nil

None of these

Solution

Question 8

$$6,000$$ shares

$$7,500$$ shares

$$9,375$$ shares

$$5,000$$ shares

Solution

Question 9

Authorised Capital

Registered Capital

Nominal Capital

All of these

Solution

Question 10

Rs 20

Rs 18

Rs 16

None of these

Solution

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