Test: Issue, Forfeiture And Reissue Of Shares - 4


40 Questions MCQ Test Principles and Practice of Accounting | Test: Issue, Forfeiture And Reissue Of Shares - 4


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QUESTION: 1

​G Ltd. acquired assets worth Rs.7,50,000 from H Ltd. by issue of shares of Rs.100 at a premium of 25%. The number of shares to be issued by G Ltd. to settle the purchase consideration = ?

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QUESTION: 2

B Ltd., a listed company, proposed to issue 1,00,000 equity shares of Rs.10 each at par by way of private placement. The maximum amount of brokerage that can be paid by the company = ?

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QUESTION: 3

D Ltd. issued 5,000 equity shares of Rs.20 each at a premium of 20% payable Rs.8 on application (including premium), Rs.10 on allotment and the balance on first and final call. The company received applications for 7,500 shares and allotment was made prorata. E, to whom 1,500 shares were allotted, failed to pay the amount due on allotment.All her shares were forfeited after the call was made. The forfeited shares were reissued to F at par. Assuming that no other bank transactions took place, the bank balance of the company after affecting the above transactions = ?

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QUESTION: 4

Declared dividend should be classified in the Balance Sheet as a _______.

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QUESTION: 5

The interest on calls-in-advance is paid for the period from the _______.

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QUESTION: 6

As per Schedule VI of the Companies Act, 1956, under which of the following heads is ‘Premium on issue of Preference Shares’ shown in the balance sheet of a company?

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QUESTION: 7

Which of the following signifies the difference between par value and an issue price below par?

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QUESTION: 8

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

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QUESTION: 9

On approval from the Central Government, the rate of discount on issue of shares can be ———percent of the nominal value of the shares.

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QUESTION: 10

The Share Premium Account should be shown under

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QUESTION: 11

Use the following information for questions 51 and 52

  • The company wants to create a Debenture Redemption Reserve and to transfer Rs.50,000 every year out of profits to redeem the debentures.
  • The company declared 10% dividends.

Q.The amount of dividend declared = ?

Solution:
QUESTION: 12

  • The company wants to create a Debenture Redemption Reserve and to transfer Rs.50,000 every year out of profits to redeem the debentures.
  • The company declared 10% dividends.

Q.The balance of Profit and Loss Appropriation account transferred to Balance Sheet after effecting the above transactions = ?

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QUESTION: 13

If the forfeited shares are issued at a premium, the amount of the premium shall be credited to

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QUESTION: 14

IJK Ltd. issued 20,000 shares of Rs.10 each at a premium of 20% on May 01, 2004, payable as follows:

 

Q.Mrs. M, to whom 1,000 shares were allotted, has paid Rs.5,000 on June 01, 2004. At the time of remitting the allotment money, she indicated that the excess money should be adjusted towards the call money. The directors of the company made the first and final call on October 31, 2004. The company has a policy of paying interest on calls-in-advance.
The amount of interest paid to Mrs. M on calls-in-advance = ?

Solution:
QUESTION: 15

The following information pertains to X Ltd.

i. Equity share capital called up Rs.5,00,000

ii. Calls in arrear Rs. 40,000

iii. Calls in advance Rs. 25,000

iv. Proposed dividend 15%

 

Q.The amount of dividend payable = ?

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QUESTION: 16

Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money. On forfeiture, the share capital account will be _________.

Solution:

Here, 10,000 shares of Rs 10 each were issued and called up per share is Rs 8. A Ltd. sold 200 shares due to non-payment of first call at Rs 2 i.e. Rs 400. Allotment and application money was paid at Rs 6 per share i.e. Rs 1200. If there is forfeiture of shares, the share capital account will be debited by Rs 8*200 (Rs 8 is the called up value of shares) i.e. Rs 1600.

QUESTION: 17

B Ltd. issued shares of Rs.10 each at a discount of 10%. Mr. C purchased 30 shares and paid Rs.2 on application but did not pay the allotment money of Rs.3. If the company forfeited his entire shares, the forfeiture account will be credited by ______.

Solution:
QUESTION: 18

Use the following information for questions 58 and 59

B Ltd. invited applications for 5,000 shares of Rs.10 each at a premium of Rs.2 per share payable as follows:

Allotment was made on pro rata basis to the applicants of 6,000 shares. Mr. C to whom 60 shares were allotted, failed to pay allotment money and call money. Mr. D the holder of 100 shares, failed to pay call money. All these shares were forfeited after proper notice.

 

Q.On forfeiture, the amount credited to share allotment account = ?

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QUESTION: 19

B Ltd. invited applications for 5,000 shares of Rs.10 each at a premium of Rs.2 per share payable as follows:

Allotment was made on pro rata basis to the applicants of 6,000 shares. Mr. C to whom 60 shares were allotted, failed to pay allotment money and call money. Mr. D the holder of 100 shares, failed to pay call money. All these shares were forfeited after proper notice.

 

Q.On forfeiture, the amount credited to share forfeiture account = ?

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QUESTION: 20

Which of the following statements is false?

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QUESTION: 21

A company invited applications for 25,000 equity shares of Rs10 each and received 30,000 applications along with the application money of Rs.4 per share. Which of the following alternatives can be followed?
I. Refund the excess applications.
II. Make pro rata allotment to all the applicants, and refund the excess application money.
III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.
IV. Not to allot any shares to some applicants and make pro rata allotment to other applicants.
V . Make pro rata allotment to all the applicants and adjust the excess money received towards call money.

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QUESTION: 22

The document inviting offers from public to subscribe for the debentures or shares or deposits of a body corporate is a _____.

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QUESTION: 23

As per Schedule VI of the Companies Act, 1956, forfeited shares account will be ______.

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QUESTION: 24

The authorized capital of M Ltd. consists of both cumulative preference shares and equity shares. Each 5% cumulative preference share has a par value Rs.100. Each equity share has a par value Rs.10.  During the year April 01, 2005 to March 31, 2006, the cumulative preference share capital balance was Rs.2,00,000 and the equity share capital balance was Rs.5,00,000.

 

Q.If dividend declarations totalled Rs.8,000 and Rs.15,000 in the year 2004-05 and 2005-06 respectively, the dividends allocated to the equity share holders in the year 2005-06 = ?

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QUESTION: 25

Which of the following statements is true?

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QUESTION: 26

F 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. G, 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 H at par.
Assuming that no other bank transactions took place, the bank balance of the company after effecting the above transactions = ?

Solution:
QUESTION: 27

At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.
I. A debit to Share capital account with the called-up value of shares forfeited

II. A credit to Share forfeiture account with the amount received on forfeited shares

III. A credit to Discount on issue of shares with the amount of discount allowed on forfeited shares

IV. A credit to Calls-in-arrears with the amount due but not paid on forfeited shares

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QUESTION: 28

When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________

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QUESTION: 29

Capital Reserves are created out of ______.

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QUESTION: 30

As per The Companies Act, only preference shares, which are redeemable within ____ can be issued

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QUESTION: 31

Which of the following is not true?

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QUESTION: 32

The subscribed share capital of S Ltd. is Rs.80,00,000 of Rs.100 each. There were no calls in arrear till the final call was made. The final call made was paid on 77,500 shares. The calls in arrear amounted to Rs.62,500. The final call on share = ?

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QUESTION: 33

Dividends are usually paid on _________.

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QUESTION: 34

The maximum amount beyond which a company is not allowed to raise funds, by issue of shares is known as _______.

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QUESTION: 35

Which of the following should be deducted from the share capital to find out paid-up capital?

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QUESTION: 36

If a shareholder does not pay his dues on allotment, for the amount due, there will be a ________.

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QUESTION: 37

The discount allowed on re-issue of forfeited shares is debited to __________.

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QUESTION: 38

Maximum amount that can be collected as premium as a percentage of face value = ?

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QUESTION: 39

Consider the following information pertaining to the issue of shares of a company. The company issued shares of Rs.10 each at a premium of Rs.2 payable as:

 

Q.Mr. E who holds 100 shares failed to pay the first call money. The company has forfeited the 100 shares after the first call. On forfeiture, the amount debited to share capital account = ?

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QUESTION: 40

Use the following information for questions 80 and 81

D Ltd. issued 10,000 equity shares of Rs.10 each at a premium of 20%. The share amount was payable as:

Applications were received for 14,000 shares and the shares were allotted to applicants on pro-rata basis. E, who was allotted 300 shares, failed to pay the first call. On his subsequent failure to pay the second and final call, all his shares were forfeited.  Out of the forfeited shares, 200 shares were re-issued @ Rs.9 per share.

 

Q.The amount transferred to capital reserve = ? and the balance in share forfeiture accounts respectively, are

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