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Published on: 01/10/2019
Company Accounts
Download Tamil Nadu 12th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.
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1.
Muthu was holding 20 equity shares of Rs.10 each on which he paid Rs.2 on application but could not pay Rs.3 on allotment and Rs.1 on first call. Directors forfeited the shares after the first call. Give journal entry for recording the forfeiture of shares.
2.
Write a short note on
(i) Rights issue
(ii) Bonus issue
3.
Write a short note on
(i) Public issue
(ii) Private placement
4.
Explains the divisions of share capital.
5.
What are the characteristics of a company?
6.
What is reissue of forfeited shares?
7.
Write a brief note on calls in advance.
8.
Gemini Ltd. forfeited 20 equity 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 reissued to Naresh by receiving Rs.6 per share paid up as Rs.7 per share. Pass journal entries for forfeiture and reissue.
9.
Anu Company forfeited 200 equity shares of Rs.10 each issued at par held by Thiyagu for nonpayment of the final call of Rs.3 per share. The shares were reissued to Laxman at Rs.6 per share. Show the journal entries for forfeiture and reissue.
10.
State the differences between preference shares and equity shares.
1.
| Date | Particulars | L.F. | Debit Rs. |
Credit Rs. |
|
|---|---|---|---|---|---|
| Equity share capital A/c (20 × 6) | Dr. | 120 | |||
| To Equity share allotment A/c (20 × 3) | 60 | ||||
| To Equity share first call A/c (20 × 1) | 20 | ||||
| To Forfeited shares A/c (20 × 2) | 40 | ||||
| (Shares forfeited) |
2.
(i) Rights issue
Issue of equity shares to the existing shareholders of the company through a letter of offer is known as rights issue.
(ii) Bonus issue
Issue of equity shares to the existing shareholders of the company free of cost out of accumulated profit is known as bonus issue.
3.
(i) Public issue
Issue of equity shares to the public through prospectus by a public company is called public issue. It includes initial public offer and further public offer.
(ii) Private placement
Private placement means any offer of equity shares or invitation to subscribe equity shares to a select group of persons by a company (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in Section 42 of the Indian Companies Act, 2013.
4.
The share capital of a company is divided into the following categories:
(i) Authorised capital
It means such capital as is authorised by the memorandum of association. It is the maximum amount which can be raised as capital. It is also known as registered capital or nominal capital.
(ii) Issued capital
This represents that part of authorised capital which is offered for subscription.
(iii) Subscribed capital It refers to that part of issued capital which has been applied for and also allotted by the company.
(iv) Called up capital It refers to that part of subscribed capital which has been called up by the company for payment.
(v) Paid up capital
It is that part of called up capital which has been actually paid by the shareholders.
(vi) Reserve capital
The company can reserve a part of its subscribed capital to be called up only at the time of winding up. It is called reserve capital.
5.
Following are the characteristics of a company:
(a) Voluntary association: A company is a voluntary association of persons. No law can compel persons to form a company
(b) Separate legal entity: Company is an artificial person. It has a separate legal entity which is separate and distinct from its members.
(c) Common seal: A company may have a common seal which can be affixed on the documents.
(d) Perpetual succession: A company continues for ever. Its continuity is not affected by the changes in its members. It can be wound up only by law.
(e) Limited liability: The liability of the shareholders of the company is limited to the extent of face value of the shares held by the shareholders.
(f) Transferability of shares: The shares of a company are freely transferable except incase of a private company.
6.
The direction of a company have an authority of reissue of shares once forfeited by them due to non-payments of calls. They can rreissue the forfeitedshares at par, at premium or at discount. When forfeited shares are reissued at a premium, the amount of such premium will be credited to securities premium account.
If the reissue price is more than the amount. Unpaid on forfeited shares it results in profit and is transferred to capital reserve account.
7.
(i) The excess amount paid over the called up value of a share is known as calls in advance.
(ii) It is the excess money paid on application or allotment or calls. Such excess amount can be returned or adjusted towards future payment.
(iii) If the company decides to adjust such amount towards future payment, the excess amount may also be transferred to a separate account called call in advance.
(iv) Calls in advance does not form part of the company's share capital and no dividend is payable on such amount.
(v) In the balance sheet, it should be shown under current liabilities.
8.
| Date | Particulars | L.F. | Debit Rs. |
Credit Rs. |
|
|---|---|---|---|---|---|
| Equity share capital A/c (20 × 7) | Dr. | 140 | |||
| To Equity share first call A/c (20 × 2) | 40 | ||||
| To Forfeited shares A/c (20 × 5) | 100 | ||||
| (Forfeiture of 120 shares, Rs.7 called up) | |||||
| Bank A/c (15 × 6) | Dr. | 90 | |||
| Forfeited shares A/c | 15 | ||||
| To Equity share capital A/c (15 × 7) | 105 | ||||
| (Reissue of 15 forfeited shares @ Rs.6 per share) | |||||
| Forfeited shares A/c | Dr | 60 | |||
| To Capital reserve A/c | 60 | ||||
| (Gain on reissue of forfeited shares transferred to capital reserve account) |
Note:
Computation of transfer to capital reserve
| Forfeited amount for reissued shares of 15 | = \(\frac{100}{20}\times\)15 | = 75 |
| Less: Loss on reissue | 15 | |
| Transfer to capital reserve | 60 |
Remaining balance in shares forfeited account Rs. 25 will appear in the balance sheet. Accountancy.
9.
| Date | Particulars | L.F. | Debit Rs. |
Credit Rs. |
|
|---|---|---|---|---|---|
| Equity share capital A/c (200 × 10) | Dr. | 2,000 | |||
| To Equity share final call A/c (200 × 3) | 600 | ||||
| To Forfeited shares A/c (200 × 7) | 1,400 | ||||
| (200 shares forfeited) | |||||
| Bank A/c (200 × 6) | Dr | 1,200 | |||
| Forfeited shares A/c (200 × 4) | Dr | 800 | |||
| To Share capital A/c (200 × 10) | 2,000 | ||||
| (Forfeited shares reissued) | |||||
| Forfeited shares A/c (1,400-800) | Dr. | 600 | |||
| To Capital reserve A/c | 600 | ||||
| (Gain on reissue of forfeited shares transferred to capital reserve account) |
10.
| Basis | Equity shares | Preference shares | |
| 1. | Meaning | Equity shares are the ordinary share of the company representing the part ownership of the shareholder in the company. |
Preference shares are the shares that carry preferential rights on the matters of payment of dividend and repayment of capital. |
| 2. | Payment of dividend | The dividend is paid after the payment of all liabilities |
Priority in payment of dividend over equity shareholders. |
| 3. | Rate of dividend | Fluctuating | Fixed |
| 4. | Voting rights | Equity shares carry voting rights | Normally, preference shares do not carry voting rights |
| 5. | Convertibility | Equity shares can never be converted | Preference shares can be converted into equity shares. |
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