Questions and Answers of Corporate Accounting

Explain the different types of shares.
Ram Limited purchased assets of ₹10,00,000 from Rahul Limited. The company issued equity shares of ₹10 each fully paid up to the satisfaction of their claim. Pass journal entries to record these
A Ltd. issued shares for non-cash consideration in the following cases. Pass the necessary journal entries to record the transactions: 1. Issued 20,000 shares of ₹ 10 each in consideration for
A share allotment is classified as: (a). Personal A/c (b). Real A/c (c). Fictitious A/c (d). Nominal A/c
Journalise the following transactions: a. A Ltd. issued 40,000 shares of ₹10 each for cash. The whole amount is duly received. b. AB Ltd. issued 10,000 shares of ₹10 each for cash at
True False. A shareholder of the company is not liable for the act of the company.
Illustrate with an example how does a company issue shares at ‘par’, at ‘premium’ and at ‘discount’?
Shareholders receive dividend as return for their ____________.
Explain briefly the provisions of the Indian Companies Act 1956 regarding issue of shares at discount and at premium.
Vaishali Ltd., purchased the business of Vikram Ltd., for ₹4,00,000 payable in fully paid up shares of ₹100 each. What entries will be made in the books of Vaishali Ltd., if such issue is:(i) At
The minimum share application money is: (a). 5% of the face value of shares (b). 10% of the face value of shares (c). 20% of the face value of shares (d). 15% of the face value of
Sumathi Ltd. issued 2,00,000 equity shares of ₹10 each to the public. The issue was fully subscribed by the public and the amount has been paid in one single instalment. Pass the required journal
Ganesh Ltd. issued prospectus inviting applications for 10,000 equity shares of ₹10 each, payable as follows:The issue is fully subscribed. Pass journal entries in the books of Ganesh Ltd.,
Bala Co Ltd. was registered with a share capital of ₹10,00,000 in shares of ₹100 each. The company acquired the business of M/s Sundari and Sons for ₹2,00000 payable as to ₹1,50,000 in fully
True False. Equity shares and Preference shares are the two types of shares issued by a registered company in India.
What do you mean by allotment of shares?
Companies are now permitted to issue equity shares with disproportionate________ rights.
Can a new company issue shares at discount? If no, explain the provisions.
Anandhi Ltd., purchased Plant and Machinery worth ₹2,30,000 from Rajan Traders. Payment was made to ₹20,000 by cheque and the balance amount by issue of equity shares of ₹10 each fully paid at
Rajan Ltd. purchased the business of Raghu Bros. for ₹45,00,000, payable in fully paid shares of ₹100 each. What entries will be made in the books of Rajan Ltd., if such an issue is
Securities Premium A/c is shown on: (a). Assets side of Balance Sheet (b). Liabilities side of Balance Sheet (c). Credit side of Profit and Loss A/c (d). Debit side of Trading A/c
A company offered for public subscription 20,000 equity shares of ₹100 each payable as ₹20 per share on application, ₹30 on allotment, ₹20 three months after allotment and the balance six
True False. A public limited company having share capital can start its operation after getting its incorporation certificate.
Explain ‘pro-rata’ allotment of shares.
A call money on shares should not exceed ________of the face value of shares.
Explain forfeiture and re-issue of shares.
A company issued 30,000 shares of ₹10 each at a discount of ₹1 per share payable ₹2 on application, ₹3 on allotment and the balance on the final call. All the shares offered were applied and
The rate of discount on shares cannot exceed: (a). 4% (b). 6% (c). 10% (d). 8%
True False. Share premium amount can be used to write off premium on redemption of preference shares or debentures of the company.
CD Ltd. offered to the public 20,000 equity shares of ₹100 each at a premium of ₹10 per share. The payment was to be made as follows: On application ₹20; on allotment ₹40 (including
Preference shareholders have got preference as regards _______________.
Write short notes on:i. Bonus shares ii. Minimum subscription iii. Surrender of shares iv. Rights issue v. Stock- invest scheme vi. Sweat equity vii. Issue of shares for
Vikram Ltd. issued 10,000 shares of ₹10 each to the public. The public has applied for 9,000 shares. The shares are payable as follows:Give journal entries in the book of the company. On
Discount on issue of shares A/c is shown on: (a). Assets side of B/s (b). Liabilities side of B/s (c). Debit side of Profit & Loss A/c (d). Credit side of Trading A/c
A company issued 30,000 shares of ₹10 each payable ₹2 on application, ₹3 on allotment, ₹2 on first call and the balance on the final call. All the shares offered were applied and allotted.
What is meant by “Over subscription” ? How do you treat the excess application money in accounts?
True False. When shares originally issued at discount are forfeited, the discount in respect of them is to be canceled.
Rakesh Ltd. issued to public 5,000 equity shares of ₹100 each at a premium of ₹10 per share payable as follows:On application ₹20 On allotment ₹40 On 1st and final call
Unless otherwise stated, a preference shares is always deemed to be cumulative, non-participating and __________.
When shares are forfeited, the share capital A/c is debited by: (a). Paid-up capital (b). Called-up amount (c). Issue price (d). Nominal value of such shares
Blue Star company issued 50,000 shares of ₹10 each payable as under:The public applied for 90000 shares. The allotment was made as follows on 1st August 2015. The 1st call was made on 1st Nov
What are the purposes for which securities premium amount can be used?
A company offers to its existing equity shareholders the right to buy one share of ₹100 each at ₹120 for every three shares held. The cum rights quotation in the market for the company’s share
Lakshmi Ltd. invited applications for 20,000 shares of `10 each, payable as follows: on application ₹4; on allotment ₹4; on final call ₹2. Applications were received for 25,000 shares. The
Explain Calls-in-Advance? What is the accounting treatment for Calls-in Advance?
A company cannot issue shares at _________.
A Ltd. company with an authorised capital of ₹2,00,000 in shares of ₹100 each issued 1,000 of such shares payable ₹25 per share on application, ₹25 on allotment, ₹20 three months later, and
Y Ltd. forfeited 1,000 equity shares of ₹10 each for non-payment of the first call of ₹2 and the final call of ₹3 per share. Pass necessary journal entry.
How does Calls-in-Arrears and Calls-in-Advance appear in balance sheet?
The allotment of shares should not be completed within__________ days of the issue of the prospectus.
AB Ltd. invited application for 10,000 shares of `10 each. The amount payable is ₹3 on application, ₹4 on allotment and ₹3 on first and final call. The whole of the above issue was applied for
The directors of A Ltd., resolved on 1st May 2010 that 4,000 ordinary shares of ₹10 each, ₹7.50 paid, be forfeited for non - payment of final call of ₹2.50. On June 10, 2010, out of the above,
Damodram Co. Ltd. issued 3,000 equity shares of ₹100 each, at a premium of ₹20 per share, payable as follows:On application—₹20; on allotment—₹40; on first call—₹30; on final
MN Ltd., forfeited 200 equity shares of ₹10 each issued at a discount of 10% for non-payment of the 1st call of ₹2 and final call of ₹3 per share. Out of these 100 shares were re-issued at ₹8
Explain forfeiture of shares? Can forfeited shares be re-issued at discount?
A company issued for public subscription 40,000 shares of ₹10 each payable:On application: ₹2 On allotment: ₹5 On call: ₹3Applications were received for 60,000 shares. Applicants
The profit on re-issue of forfeited shares is transferred to:(a). Reserve fund (b). Capital redemption reserve (c). Capital reserve (d). Goodwill
JJ Co. Ltd. offered 2,500 shares of ₹10 each to the public on the following terms:₹3 to be paid on application, ₹3.50 to be paid on allotment, ₹1.50 to be paid three month after allotment and
A company forfeited 50 shares of ₹10 each issued at a premium of 10% for nonpayment of the final call of ₹3 per share. Out of these, 35 shares were re-issued at ₹8peer share as fully paid up.
What are the journal entries to be passed in the books of the company on forfeiture of shares?
A company has decided to increase its existing share capital by making a rights issue to the existing shareholders in the proportion of one new share for every two old shares held. You are required
The following are extracts from the balance sheet of AB Ltd. as on 31-12-2003: A resolution was passed to issue 1,000 bonus shares of ₹10 each by providing ₹5,000 out of Profit & Loss
D Ltd. forfeited its 200 shares of ₹10 each on which ₹5 per share was received. Pass entry regarding re-issue of all the shares if:(i) Shares are re-issued at ₹8 per share, fully paid
What are the journal entries to be passed on re-issue of forfeited shares?
Gopu Industries Ltd. issued 50,000 shares of ₹20 each at par. The following are the details of the amounts payable.Except Rajan, a shareholder holding 1,000 shares who failed to pay the allotment
Rights shares are those shares which are: (a). Issued to the public (b). First offered to the existing shareholders (c). Issued to the promoters (d). Issued to preference
X Ltd. forfeited 10 shares of ₹10 each (₹6 called up) issued at a discount of 10% to Neeru, on which she had paid ₹2 per share. Out of these, 8 shares were reissued to Meera as ₹8 called up,
Madhu Ltd. invited applications for 3,000 shares of ₹10 each, at a discount of 10%, payable as follows:The whole of the issue was subscribed and paid for, except the final call on 400 shares, which
The Paid-up capital is the: (a). Difference between subscribed capital and called up capital (b). Authorised Capital (c). Uncalled capital (d). Issued capital
Following are the extracts from the Balance Sheet of Chitra Ltd., as on 31st March 2009.A resolution was passed declaring the issue of bonus of 25% on equity shares to be provided as to ₹2,00,000
X Ltd. issued for public subscription 20,000 shares of ₹10 each at a premium of ₹2 per share payable as under:Applications for 30,000 shares were received. Allotment was made pro rata to the
A Ltd. issued 10,000 equity shares of ₹10 each, payable as under:The public applied for 8,000 shares, which are allotted. All the money due on shares was received except the first and final call on
Raj Ltd. issued 40,000 equity shares of ₹10 each payable ₹5 on application and ₹5 on allotment. Applications were received for 50,000 shares and the allotment was made on pro-rata basis.
Mr. Raghu was holding 4,000 shares of ₹10 each of Jayanthi Ltd. The shares were issued at par and he had paid ₹3 on application and ₹4 on allotment. He did not pay the call money of ₹3 per
The following is the Balance Sheet of C Company Ltd. as on 31st March, 2016:The net profits for the five years were ₹ 37,000; ₹ 42,000; ₹ 40,000; ₹ 43,000; and ₹ 38,000 before providing
Following are the summarised Balance Sheets of Imperial Co. Ltd. and Colonial Co. Ltd. as on December 31, 2015:You are required to prepare a Consolidated Balance Sheet as on 31.12.2015 showing in
H Ltd. acquired 40,000 Equity Shares of S Ltd. on 1st January, 2015. The following are the Balance Sheets of the two companies as at 31st December, 2015:(i) Bills receivables of H ltd. include ₹
The following are the summarised Balance Sheets of A Ltd. and its subsidiary B Ltd. as on 31.12.2015:A Ltd. acquired shares in B Ltd. on 1.1.2015 when B Ltd. had 10,000 in General Reserve. No
From the following Balance Sheet of a holding company and its subsidiary as on March 31, 2016 prepare a Consolidated Balance Sheet:When control was acquired, S Ltd. had ₹ 40,000 in General Reserve
The following are the summarised Balance Sheets of X Ltd. and its subsidiary Y Ltd. as at 31st December, 2015.The following information are supplied:(1) X Ltd. acquired shares in Y Ltd. on 1st
H Ltd. acquired 4,000 Equity Shares of S Ltd. on 1.1.2015. Their Balance Sheets as at 31.12.2015 were as follows:On 1.1.2015, the Profit and Loss Account of S Ltd. showed a credit balance of ₹
H Ltd. acquired 6,000 Equity Shares of S Ltd. of the face value of ₹ 10 each at a price of ₹ 85,000 on 1.4.2015. The Balance Sheet of the two companies as at 31.3.2016 were as follows:Out of the
The following are the summarised Balance Sheets of H Ltd. and its subsidiary S Ltd. as at 30th November, 2016:You are to prepare a Consolidated Balance Sheet as at 30.11.2016 showing in detail the
The Balance Sheet of H Ltd. and S Ltd. as at 31.12.2015 were as follows:Additional information:(a) Sundry Creditors of S Ltd. include ₹ 10,000 due to H Ltd.(b) Bills Receivable of H Ltd. include
The Balance Sheet of H Ltd. and S Ltd. as at 31st December, 2015 are as follows:In the case of S Ltd., the profit for the year is ₹ 24,000 before transfer of ₹ 10,000 to General Reserve. H Ltd.
X Ltd. acquired 80% of the Equity Shares of ₹ 100 each in Y Ltd. on 31st December, 2015. Given are the summarised balances of X Ltd. and Y Ltd. as on that date:You are given the following
A Ltd. acquired 1,600 Equity Shares of ₹ 100 each in B Ltd. on 31.12.2015. The summarised Balance Sheets of A Ltd. and B Ltd. as on that date were as under:You are also supplied the following
M Ltd. acquired all the shares of N Ltd. as on 1st January, 2015 for a price of ₹ 7,35,000. The following are the summarised Balance Sheets on 31st December, 2015:The balance in the Profit and Loss
The following are the Balance Sheets of a holding company and subsidiary company as on December 31, 2014 and 2015:The shares in the subsidiary company were acquired on December 31, 2014. No dividend
Strong Ltd. acquired 3,200 Equity Shares of Weak Ltd. on December 31, 2015. The summarised Balance Sheet of the two companies as on the date are given below:You are supplied with the following
The Balance Sheets of X Ltd. and Y Ltd. as at 31st December, 2015 of X Ltd. are given below:At the date of acquisition of the shares in Y Ltd. by X Ltd. the General Reserve and Profit and Loss
Following are the Balance Sheets of A Ltd. and its subsidiary B Ltd.:You are required to prepare a Consolidated Balance Sheet together with work sheet, having regard to the following:(i) On the date
From the following Balance Sheets, make out the Consolidated Balance Sheet of the group as at 31.12.2015:Additional information:(1) Net profit for 2015 (included above) : H Ltd. ₹ 40,000; S Ltd.
From the following Balance Sheets of H Ltd. and its subsidiary S Ltd. as at 31.12.2015 prepare a Consolidated Balance Sheet:On the date when H Ltd. acquired shares in S Ltd. latter’s reserve stood
The following are the summarised Balance Sheets of H Ltd. and S Ltd. as on March 31, 2016:The following particulars are available:(a) The General Reserve of S Ltd. as on 31.3.2015 was ~ 80,000.(b) H
H Ltd. acquired 8,000 Equity Shares of S Ltd. on 30.6.2015. Their Balance Sheets as at 31.12.2015 stood as follows:On 1.1.2015, the Profit and Loss Account and the General Reserve of S Ltd. showed
The following are the Balance Sheets of H Ltd. and S Ltd. as at 31st December, 2015:(i) H Ltd. purchased on 1st July, 2015, 4,000 shares in S Ltd. at ₹ 15 each.(ii) Stock of S Ltd. includes ₹
You are given the following Balance Sheets of H Ltd. and S Ltd. as on December 31, 2015:The Profit and Loss Account of S Ltd. showed a credit balance of ₹ 50,000 on January 1, 2015. A dividend of
H Ltd purchased 13,500 shares of S Ltd on 01.07.2012 at a cost of ₹ 2,10,000. Following are the Balance Sheets of two companies as at 31.03.2017:Other information:(a) S Ltd had on 1.4.2016 ₹
The following Balance Sheets are presented to you (31.12.2015):H Ltd. acquired the shares on May 1, 2015. The Profit and Loss Account of S Ltd. showed a debit balance of ₹ 1,50,000 on January 1,

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