Test: Issue, Forfeiture And Reissue Of Shares - 3


40 Questions MCQ Test Principles and Practice of Accounting | Test: Issue, Forfeiture And Reissue Of Shares - 3


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QUESTION: 1

The excess price received over the par value of shares, should be credited to __________.

Solution:
QUESTION: 2

When shares are issued to promoters for the services offered by them, the account that will be debited with the nominal value of shares is ____________.

Solution:
QUESTION: 3

Which of the following statements is false?

Solution:

The correct option is A.

When the shares are forfeited the premium which has already been received cannot be debited as this amount has already been paid by shareholders and cannot be debited for the purpose of receiving the amount in future.

a newly opened business cannot issue shares at discount since it has no earnings as of now. If this happens, the company might be in loss and may lose the opportunity for goodwill.

Security premium is used by many companies to redeem their preference shares in case of shortage of funds.

Hence, the option A is false because forfeited shares can be reissued at premium if the company needs funds in its reserves.

QUESTION: 4

The directors of E Ltd. made the final call of Rs.30 per share on May 15, 2004 indicating the last due of payment of call money to be paid on May 31, 2004. Mr. F holding 5,000 shares paid the call money on July 15, 2004. If the company adopts Table A, the amount of interest on calls-in-arrear is? 

Solution:
QUESTION: 5

Use the following information for questions 5 to 9

B Ltd. was registered with a share capital of Rs 1,00,00,000 divided into equity shares of Rs 10 each. It issued 9,00,000 equity shares to the general public at par payable as to Rs 3 on application, Rs 3 on allotment and balance in 2 equal calls. The public had subscribed for 8,50,000 shares.
Till 31st March, 2006, only first call had been made. All the shareholders had paid up except Mr. C, a holder of 25,000 shares, who did not pay the call money.

 

Q.How much is B Ltd.’s authorized share capital?

Solution:
QUESTION: 6

B Ltd. was registered with a share capital of Rs 1,00,00,000 divided into equity shares of Rs 10 each. It issued 9,00,000 equity shares to the general public at par payable as to Rs 3 on application, Rs 3 on allotment and balance in 2 equal calls. The public had subscribed for 8,50,000 shares.
Till 31st March, 2006, only first call had been made. All the shareholders had paid up except Mr. C, a holder of 25,000 shares, who did not pay the call money.

 

Q.How much is B Ltd.’s Issued Capital?

Solution:
QUESTION: 7

B Ltd. was registered with a share capital of Rs 1,00,00,000 divided into equity shares of Rs 10 each. It issued 9,00,000 equity shares to the general public at par payable as to Rs 3 on application, Rs 3 on allotment and balance in 2 equal calls. The public had subscribed for 8,50,000 shares.
Till 31st March, 2006, only first call had been made. All the shareholders had paid up except Mr. C, a holder of 25,000 shares, who did not pay the call money.

 

Q.How much is B Ltd.’s Subscribed Capital?

Solution:
QUESTION: 8

B Ltd. was registered with a share capital of Rs 1,00,00,000 divided into equity shares of Rs 10 each. It issued 9,00,000 equity shares to the general public at par payable as to Rs 3 on application, Rs 3 on allotment and balance in 2 equal calls. The public had subscribed for 8,50,000 shares.
Till 31st March, 2006, only first call had been made. All the shareholders had paid up except Mr. C, a holder of 25,000 shares, who did not pay the call money.

 

 Q.How much is B Ltd.’s Called Up Capital?

Solution:
QUESTION: 9

B Ltd. was registered with a share capital of Rs 1,00,00,000 divided into equity shares of Rs 10 each. It issued 9,00,000 equity shares to the general public at par payable as to Rs 3 on application, Rs 3 on allotment and balance in 2 equal calls. The public had subscribed for 8,50,000 shares.
Till 31st March, 2006, only first call had been made. All the shareholders had paid up except Mr. C, a holder of 25,000 shares, who did not pay the call money.

 

Q.How much is B Ltd.’s Paid Up Capital?

Solution:
QUESTION: 10

Use the following information for questions 10 to 23

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Amount received on application = ___________.

Solution:
QUESTION: 11

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Application money adjusted against allotment = __________. a.

Solution:
QUESTION: 12

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Amount refunded to shareholders = __________.

Solution:
QUESTION: 13

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

.

 Q.Total amount paid by E = _________.

Solution:
QUESTION: 14

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Total amount paid by F = ________.

Solution:
QUESTION: 15

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Total amount paid by G = __________.

Solution:
QUESTION: 16

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Amount transferred to Share forfeiture account at the time of forfeiting E’s shares = _________.

Solution:
QUESTION: 17

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Amount transferred to Share forfeiture account at the time of forfeiting F’s shares = _________.

Solution:
QUESTION: 18

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Net balance in Share Capital Account = ________.

Solution:
QUESTION: 19

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Net balance in Securities Premium Account = ________.

Solution:
QUESTION: 20

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Net balance in Share Forfeiture Account = ________.

Solution:
QUESTION: 21

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

.

 

Q.Net balance in Capital Reserve Account = ________.

Solution:
QUESTION: 22

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Net balance in Bank Account = ________.

Solution:
QUESTION: 23

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :

On application Rs.20

On allotment Rs.50 (including premium)

On first call Rs.30

On second and final call Rs.20

Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.

 

Q.Balance Sheet Total = _________.

Solution:
QUESTION: 24

When shares are forfeited, the share capital account is debited with ________ and the share forfeiture account is credited with __________.

Solution:
QUESTION: 25

Use the following information for the questions 25 to 29

B Ltd. issued 80,000 equity shares of Rs.10 each, payable as under:

On application     Rs.3

On allotmen     Rs.4

On first call     Rs.2

On final call     Rs.1

The applications received for 1,20,000 shares were dealt with as under:

  •  Applicants of 20,000 shares were allotted in full.
  •  Applicants of 80,000 shares were allotted 60,000 shares pro-rata.
  •  Applications for 20,000 shares were rejected

 

Q.Amount received on application is _____________.

Solution:
QUESTION: 26

Use the following information for the questions 25 to 29

B Ltd. issued 80,000 equity shares of Rs.10 each, payable as under:

On application     Rs.3

On allotmen     Rs.4

On first call     Rs.2

On final call     Rs.1

The applications received for 1,20,000 shares were dealt with as under:

  •  Applicants of 20,000 shares were allotted in full.
  •  Applicants of 80,000 shares were allotted 60,000 shares pro-rata.
  •  Applications for 20,000 shares were rejected

 

Q.Total excess money received as compared to the number of shares allotted = ?

Solution:
QUESTION: 27

Use the following information for the questions 25 to 29

B Ltd. issued 80,000 equity shares of Rs.10 each, payable as under:

On application     Rs.3

On allotmen     Rs.4

On first call     Rs.2

On final call     Rs.1

The applications received for 1,20,000 shares were dealt with as under:

  •  Applicants of 20,000 shares were allotted in full.
  •  Applicants of 80,000 shares were allotted 60,000 shares pro-rata.
  •  Applications for 20,000 shares were rejected

 

Q.Amount to be refunded = ?

Solution:
QUESTION: 28

Use the following information for the questions 25 to 29

B Ltd. issued 80,000 equity shares of Rs.10 each, payable as under:

On application     Rs.3

On allotmen     Rs.4

On first call     Rs.2

On final call     Rs.1

The applications received for 1,20,000 shares were dealt with as under:

  •  Applicants of 20,000 shares were allotted in full.
  •  Applicants of 80,000 shares were allotted 60,000 shares pro-rata.
  •  Applications for 20,000 shares were rejected

 

Q.Amount of excess application money available for adjustment against allotment money = ?

Solution:
QUESTION: 29

Use the following information for the questions 25 to 29

B Ltd. issued 80,000 equity shares of Rs.10 each, payable as under:

On application     Rs.3

On allotmen     Rs.4

On first call     Rs.2

On final call     Rs.1

The applications received for 1,20,000 shares were dealt with as under:

  •  Applicants of 20,000 shares were allotted in full.
  •  Applicants of 80,000 shares were allotted 60,000 shares pro-rata.
  •  Applications for 20,000 shares were rejected

 

Q.Amount of excess application money available for adjustment against call money = ?

Solution:
QUESTION: 30

Which type of the following shares have the right to receive dividends unpaid in prior years, whenever earnings become adequate?

Solution:
QUESTION: 31

Which of the following statements is false?

Solution:
QUESTION: 32

T Ltd. proposed to issue 6,000 equity shares of Rs.100 each at a premium of 40%. The minimum amount of application money to be collected per share = ?

Solution:
QUESTION: 33

The directors of B Ltd. made the final call of Rs.30 per share on January 15, 2004 indicating the last date of payment of call money to be January 31, 2004. Mr. C, holding 7,500 shares paid the call money on March 15, 2004.

If the company adopts Table A, of the Companies Act the amount of interest on calls-inarrear to be paid by Mr. C = ?

Solution:
QUESTION: 34

Dividends are usually paid as a percentage of ______.

Solution:
QUESTION: 35

E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro rata basis. The amount payable on application is Rs.2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from F = ?

Solution:
QUESTION: 36

O Ltd. issued 10,000 equity shares of Rs.10 each at a premium of 20% payable Rs.4 on application (including premium), Rs.5 on allotment and the balance on first and final call.
The company received applications for 15,000 shares and allotment was made pro-rata. P, to whom 3,000 shares were allotted, failed to pay the amount due on allotment. All his shares were forfeited after the call was made. The forfeited shares were reissued to Q at par.
Assuming that no other bank transactions took place, the bank balance of the company after effecting the above transactions = ?

Solution:
QUESTION: 37

A company forfeited 2,000 shares of Rs.10 each (which were issued at par) held by Mr.John for non-payment of allotment money of Rs.4 per share. The called-up value per share was Rs.9. On forfeiture, the amount debited to share capital = ?

Solution:
QUESTION: 38

If forfeited shares (which were originally issued at a discount) are reissued at a premium, the amount of such premium will be credited to ________.

Solution:
QUESTION: 39

The maximum amount beyond which a company is not allowed to raise funds, by issue of shares is its’ _____.

Solution:
QUESTION: 40

On issue of shares, the application money should not be less than

Solution: