12th Standard English Medium Accountancy Subject Company Accounts Book Back 3 Mark Questions with Solution Part - I | QB365

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12th Standard English Medium Accountancy Subject Company Accounts Book Back 3 Mark Questions with Solution Part - I

Published on: 03/06/2021

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Std: 12th Standard - Accountancy

chapter: - Book back Questions

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Questions:

Generic 3

3 x 3 = 9

What is meant by issue of shares for consideration other than cash?

What is reissue of forfeited shares?

Maruthu Ltd. forfeited 150 equity shares of Rs.10 each for non payment of final call of Rs.4 per share. Of these 100 shares were reissued @ Rs.9 per share. Pass journal entries for forfeiture and reissue.

Generic 5

2 x 5 = 10

State the differences between preference shares and equity shares.

Jenifer Ltd. issued 10,000 equity shares of Rs.10 each at par payable on application Rs.3 per share, on allotment Rs.3 per share, on first call Rs.2 per share and on second and final call Rs.2 per share. The issue was fully subscribed and all the amounts were duly received with the exception of 100 shares held by Subbu, who failed to pay the second and final call. His shares were forfeited and reissued to Hema at Rs.7 per share. Journalise the above transactions.

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Answers Key:

Generic 3

3 x 3 = 9

A company may issue shares for consideration other than cash when the company acquires fixed assets such as land and buildings, machinery, etc under such situation, the following journal entries are to be passed.

Particulars	Debit Rs.	Credit Rs.
(i) For Purchase of asset:
Respective asset A/c Dr	xxx
To Vendor A/c		xxx
(ii) For issue of shares:
Vendor A/c Dr	xxx
To Equity share capital A/c		xxx
To Securities premium A/c (if issued at premium)		xxx

A company may also issue shares a consideration for the purchase of business, to promoters for their services and to brokers and underwriters for commission.

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.

In the books of Maruthu Ltd. Journal entries
Particulars		Debit Rs.	Credit Rs.
Equity share capital A/c (150 × 10)	Dr.	1,500
To Equity share final call A/c (150 × 4)			600
To Forfeited shares A/c (150 × 6)			900
(50 shares forfeited)
Bank A/c (100 × 9)	Dr.	900
Forfeited shares A/c (100 × 1)		100
To Equity share capital A/c (100 × 10)			1,000
(100 forfeited shares reissued @ Rs.9 per share)
Forfeited shares A/c	Dr.	500
To Capital reserve A/c			500
(Gain on reissue of forfeited shares transferred to capital reserve account)

Working note:
Forfeited amount for 150 shares = Rs.900
Forfeited amount for 100 shares = \(\frac{900}{150}\) x 100 = Rs.600
Gain or loss = Amount forfeited – loss on reissue
= 600 - 100
Net gain = Rs.500

Generic 5

2 x 5 = 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.

In the books of Aruna Mills Ltd. Journal entries
Particulars		Debit Rs.	Credit Rs.
Bank A/c (10,000 × 3)	Dr.	30,000
To Equity share application A/c			30,000
(Application money received)
Equity share application A/c	Dr.	30,000
To Equity share capital A/c			30,000
(Application money transferred to share capital A/c)
Equity share allotment A/c (10,000 × 3)	Dr.	30,000
To Equity share capital A/c			30,000
(Allotment money due)
Bank A/c (10,000 × 3)	Dr.	30,000
To Equity share allotment A/c			30,000
(Allotment money received)
Equity share first call A/c (10,000 × 2)	Dr.	20,000
To Equity share capital A/c			20,000
(First call money due)
Bank A/c (10,000 × 2)	Dr.	20,000
To Equity share first call A/c			20,000
(First call money received)
Equity share second and final call A/c (10,000 × 2)	Dr	20,000
To Equity share capital A/c			20,000
(Second and final call money due)
Bank A/c (9,900 × 2)	Dr.	19,800
To Equity share second and final call A/c			19,800
(Second and final call money received)
Equity share capital A/c (100 × 10)	Dr.	1,000
To Equity share second and final call A/c			200
To Forfeited shares A/c			800
(100 shares forfeited)
Bank A/c (100 × 7)	Dr.	700
Forfeited shares A/c		300
To Equity share capital A/c (100 × 10)			1,000
(Shares forfeited reissued)
Forfeited shares A/c (800-300)	Dr.	500
To Capital reserve A/c			500
(Gain on reissue of forfeited shares transferred to capital reserve account)