Accounting for share Capital Test

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Accounting for share Capital Test - 6

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Question 1
1 / -0

At the time of forfeiture of shares, with what amount share capital account will be debited, when share of Rs.20 on which Rs.16 called and Rs.12 is paid is forfeited?

A
08

B
20

C
12

D
16

Solution

Share Capital account will be debited with ₹16
i.e. Called up price on Share is 16.
Share capital account should be debited with the called up amount and not with the face value or paid up amount
Question 2
1 / -0

Discount on Reissue of shares cannot be more than the _________

A
Face value of share

B
Called up amount

C
Amount not received on allotment

D
Forfeited Amount

Solution

A company can reissue its shares (forfeited shares) at a discount but discount should not exceed the forfeited amount.
Question 3
1 / -0

When will you record the following entry?
Share Applications A/c
To Bank A/c

A
When Full amount is received on application

B
When Company pays to the Applicants

C
When Application money is received

D
When Application money is refunded

Solution

When a company reject some applications and refund the money received on the same, following journal entry will take place:
Share Applications A/c
To Bank A/c
(Being Application money refunded)
Question 4
1 / -0

Following Entry takes place when:
Bank A/c Dr.
To Share Application A/c

A
Application money is adjusted

B
Both Application money is adjusted and Application money is refunded

C
Application money is refunded

D
Application money is received

Solution

Bank account is debited because money comes in the company and share application account is credited, it is a temporary account opened to know how many applications received.
Question 5
1 / -0

Entry for reissue of forfeited shares at discount will be

A
Share Capital A/c Dr.
Share Forfeited A/c Dr.
To Bank A/c

B
Bank A/c Dr.
Share Capital A/c Dr.
To Share Forfeited A/c

C
Bank A/c Dr.
Share Forfeiture A/c Dr.
To Share Capital A/c

D
Bank A/c Dr.
To Share Capital A/c

Solution

Bank account is debited with the amount received on reissue. Share capital is credited with face value of shares reissued and share forfeiture account is debited with the amount of loss on reissue.
Question 6
1 / -0

What entry will take place at the time of receipt of calls in arrears?

A
Bank A/c Dr.
To Calls in Arrears

B
Bank A/c Dr.
To Calls in Advance

C
Bank A/c Dr.
To Share Application

D
Calls in arrears A/c Dr.
To Bank A/c

Solution

On receipt of calls in arrears, following entry will take place:
Bank A/c Dr.
To Calls in Arrears if calls in arrears have been debited at the time they were due and not received.
Question 7
1 / -0

X Limited forfeited 1,000 shares of 10 each for the non-payment of the final call of Rs.2 per share. These shares were reissued @ Rs.8 per share fully paid up. Find out the amount of capital reserve.

A
Capital Reserve ₹6,000

B
Capital Reserve ₹12,000

C
Capital Reserve ₹4,000

D
Capital Reserve ₹10,000

Solution

The amount of capital reserve will be:
Forfeited Shares A/c Dr. 6,000
To Capital Reserve 6,000

Amount forfeited =8000

Amount used on reissue=2000

Capital Reserve=8,000-2,000=6,000
Question 8
1 / -0

T Ltd. was formed with a nominal Share Capital of ₹40,00,000 divided into 4,00,000 shares of `10 each. The Company offers 130000 shares to the public payable ₹3 per share on Application, ₹3 per share on Allotment and the balance on First and Final Call. Applications were received for 120000 shares. All money payable on allotment was duly received, except on 200 shares held by Y. First and Final Call was not made by the Company. Call in arrears will be of

A
₹800

B
₹600

C
₹400

D
₹500

Solution

Call in Arrear will be 600 i.e. 200 shares × 3 = 600
Note: Amount of first and final call is not called by the company, so it should not be considered as Calls in Arrears.
Question 9
1 / -0

Forfeited shares can be reissued at ____________

A
Par and premium only

B
Par, premium or discount

C
Only at par

D
Par and discount only

Solution

Forfeited shares can be reissued at par, premium or discount. Directors of the company have authority to reissue forfeited shares at par, premium or discount.
Question 10
1 / -0

10,000 shares issued for public subscription at a premium of 10%. Full amount was payable on application. Applications were received for 15,000 shares and pro-rata allotment was made. Find the amount to be refunded?

A
55,000

B
10,000

C
1,00,000

D
No need to refund the money

Solution

Company will refund Rs.55,000 after the adjustment of application money and securities premium. (11 x 5000=55000)

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 6

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Accounting for share Capital Test - 6

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SHARING IS CARING

Question 1

08

20

12

16

Solution

Question 2

Face value of share

Called up amount

Amount not received on allotment

Forfeited Amount

Solution

Question 3

When Full amount is received on application

When Company pays to the Applicants

When Application money is received

When Application money is refunded

Solution

Question 4

Application money is adjusted

Both Application money is adjusted and Application money is refunded

Application money is refunded

Application money is received

Solution

Question 5

Share Capital A/c Dr. Share Forfeited A/c Dr. To Bank A/c

Bank A/c Dr. Share Capital A/c Dr. To Share Forfeited A/c

Bank A/c Dr. Share Forfeiture A/c Dr. To Share Capital A/c

Bank A/c Dr. To Share Capital A/c

Solution

Question 6

Bank A/c Dr. To Calls in Arrears

Bank A/c Dr. To Calls in Advance

Bank A/c Dr. To Share Application

Calls in arrears A/c Dr. To Bank A/c

Solution

Question 7

Capital Reserve ₹6,000

Capital Reserve ₹12,000

Capital Reserve ₹4,000

Capital Reserve ₹10,000

Solution

Question 8

₹800

₹600

₹400

₹500

Solution

Question 9

Par and premium only

Par, premium or discount

Only at par

Par and discount only

Solution

Question 10

55,000

10,000

1,00,000

No need to refund the money

Solution

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Share Capital A/c Dr.
Share Forfeited A/c Dr.
To Bank A/c

Bank A/c Dr.
Share Capital A/c Dr.
To Share Forfeited A/c

Bank A/c Dr.
Share Forfeiture A/c Dr.
To Share Capital A/c

Bank A/c Dr.
To Share Capital A/c

Bank A/c Dr.
To Calls in Arrears

Bank A/c Dr.
To Calls in Advance

Bank A/c Dr.
To Share Application

Calls in arrears A/c Dr.
To Bank A/c