Accounting for share Capital Test

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Accounting for share Capital Test - 7

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Weekly Quiz Competition

Question 1
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20,000 shares issued for public subscription at a premium of 10%. Full amount was payable on application. Applications were received for 30,000 shares and pro-rata allotment was made. Find the amount to be adjusted in securities premium?

A
1,10,000

B
10,000

C
1,00,000

D
20,000

Solution

Amount to be adjusted in securities premium ₹20,000.
i.e. 20,000 Shares × Premium ₹1 = 20,000
Question 2
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20,000 shares issued for public subscription at a premium of 10%. Full amount was payable on application. Applications were received for 30,000 shares and pro-rata allotment was made. Find the amount to be adjusted in Share Capital Account?

A
1,10,000

B
3,00,000

C
2,00,000

D
3,30,000

Solution

Amount to be adjusted in share capital account is ₹2,00,000.₹ i.e. 20,000 Shares x 10 = 2,00,000
Question 3
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Vinod Ltd. forfeited 1,000 equity shares of ₹100 each for the non-payment of first call ₹20 per share and second and final call of ₹25 per share. These shares were reissued at ₹50 per share fully paid up. Find out the capital reserve.

A
5,000

B
6,000

C
5,500

D
7,000

Solution

Amount forfeited on 1,000 shares = 1,000 x 55 = 55,000
Less : Discount on reissue 1,000 x 50 = 50,000
Amount to be transferred to capital reserve = 55,000 – 50,000 = 5,000
Question 4
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Vinod Limited forfeited 200 shares of ₹20 each, ₹15 per share called up on which ₹10 per share had been paid. Directors reissued all the forfeited shares to B as ₹15 per share paid up for a payment of ₹10 each. Find out capital reserve.

A
1000

B
3500

C
2000

D
2500

Solution

Amount to be transferred to capital reserve = 1,000
i.e. 2,000 – 1,000 = 1,000
Question 5
1 / -0

Directors of Vinod Limited forfeited 200 shares of ₹20 each, ₹15 per share called up on which ₹10 per share had been paid. Directors reissued all the forfeited shares to B as ₹15 per share paid up for a payment of ₹10 each. State the minimum amount at which these shares can be reissued.

A
55

B
20

C
15

D
10

Solution

While reissuing the forfeited shares the company should fix the price of reissue so that total amount received for shares 20(i.e. price of the reissued of shares i.e.10+ amount paid by the previous owner i.e.10 is not below its face value(20). This is to ensure that reissue does not amount to issue at a discount or the provisions of section 79 would become applicable.