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Important Questions - Issue of Share (Accounting for Partnership Firms and Companies) | Accountancy Class 12 - Commerce PDF Download

Chapter - Issue of Shares

Important Questions

Q1. What is the nature of share application a/c? 

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Q2. Q Ltd. forfeited 300 shares on 10 each, fully called-up for non payment of Final Call money of Rs. 4 per share. Out of these 200 shares were subsequently reissued by the company for Rs. 12 per share as fully paid-up. Amount of Forfeited Shares Account transferred to Capital Reserve is______________________.

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Q3. Bombay ltd. has a paid share capital of Rs.80 lacs and a balance of Rs.25 lacs in the security premium account. The management does not want to carry over the balance of security premium account. State the purposes for which it can be used.

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Q3. Dreamers Ltd. was formed with a capital of Rs. 30,00,000 divided into shares of Rs. 10 each. Dreamers Ltd. issued 10,000 shares of Rs. 10 each as fully paid to the signatories to the Memorandum of Association and 18,000 shares on 10 each as fully paid to the vendors against the purchase of machinery and offered 58,500 shares of Rs. 10 each Rs. 6 called-up). All the money was duly received expect first call of Rs.2 on 1000 shares out of which 400 were forfeited. The issue was fully subscribed. All money was duly received. Prepare the extract of Balance Sheet of Dreamers Ltd. Showing Share Capital.

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Q4. Hive ltd. purchased a running business from five ltd. At an agreed value of Rs.6,80,000 which includes assets of Rs.9,00,000 and creditors of Rs.1,50,000. The amount of purchase consideration was discharged by issuing 5000 shares of Rs.100 each issued at a premium of 10% and remaining by means of a bank draft.

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Q5. X Ltd. Issued 50,000 shares of Rs. 10 each at payable as Rs. 3 per share on application, Rs. 3 On allotment and Rs. 2 each on first and final call. Applications were received for 70,000 shares. It was decided: 

(a) to refuse allotment to the applicants for 10,000 shares,
 (b) to allot 20,000 shares to Mohan who has applied for similar number and  (c) to allot the remaining shares on prorata basis.
 Mohan failed to pay the allotment money and Sohan who belonged to Category C and was allotted 3,000 shares paid both the calls with allotment. Calculate the amount received on allotment. Journalise the above transactions.

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Q6. X Ltd. forfeited 400 shares of Rs.25 each (Rs. 20 called-up) held by Asha, for non-payment of allotment money of Rs.10 per share (includingRs.5 per share premium) and the first call of Rs.6 per share. Out of these, 300 shares were reissued to X as Rs.20 called-up for Rs.16 per share. Give the Journal entries for forfeiture and reissue of shares. 

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Q7. X Ltd. invited application for issuing into 5,00,000 shares of Rs.10 each. The Company offered 3,00,000 of these shares of Rs.10 each at per public, which were payable Rs.2 per share on application, Rs.3 per share on allotment and the balance on First and Final Call. Applications for 4,60,000. shares were received on which the directors allotted as follows:
 Applications for 200,000 shares-Full, Applications for 2,50,000 shares-40 per cent, Applications for 10,000 shares-Nil.
 Rs.5,40,000 was realised on account of allotment money (excluding the amount carried from Application Money) and Rs.12,50,000 on account of call. The directors decided to forfeit shares of those applicants to whom full allotment was made and on which allotment money was overdue. Pass Journal entries in the company's books. 

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8. Agent Limited issued a prospectus inviting applications for 3,000 shares of Rs. 100 each at a premium of Rs.30 payable as follows:
 On Application Rs.20 per share (Including Rs. 10 as premium)
 On Allotment Rs.50 per share (Including Rs. 20 as premium)
 On First call Rs.20 per share
 On Second call balance.
 Applications were received for 4,000 shares and allotments made on prorate basis to the applicants of 3,600 shares, the remaining applications being rejected, money received on application was adjusted on account of sums due on allotment. Renuka whom 300 shares were allotted failed to pay allotment money and calls money, and her shares were forfeited. Kanika, the applicant 360 of shares failed to pay the two calls, her shares were also forfeited. All these shares were sold to vinod as fully paid for Rs.90 per share. Show the journal entries in the books of the company.

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FAQs on Important Questions - Issue of Share (Accounting for Partnership Firms and Companies) - Accountancy Class 12 - Commerce

1. What is an issue of share in accounting for partnership firms and companies?
Ans. An issue of share refers to the process of offering shares of a company or partnership firm to the public or existing shareholders. It is a common way for businesses to raise capital and expand their operations. The process involves determining the share price, the number of shares to be issued, and the terms and conditions of the share issue.
2. What are the different types of share issues?
Ans. There are different types of share issues, such as an initial public offering (IPO), a rights issue, a bonus issue, and a private placement. An IPO is when a company offers its shares to the public for the first time. A rights issue is when a company offers new shares to its existing shareholders. A bonus issue is when a company issues additional shares to its existing shareholders for free. A private placement is when a company offers its shares to a select group of investors instead of the general public.
3. How is the share price determined in an issue of share?
Ans. The share price is determined by various factors, such as the financial performance of the company, the demand for its shares, and the prevailing market conditions. Companies may also use different valuation methods, such as the discounted cash flow method or the price-earnings ratio method, to determine the share price. The share price is usually disclosed in the offer document or prospectus issued by the company.
4. What are the accounting implications of an issue of share?
Ans. An issue of share has several accounting implications, such as the recording of share capital, share premium, and other related expenses. The share capital represents the nominal value of the shares issued, while the share premium represents the excess amount received from the issue of shares over their nominal value. The related expenses may include underwriting fees, legal fees, and other transaction costs. These items are recorded in the balance sheet of the company or partnership firm.
5. What are the legal requirements for an issue of share?
Ans. An issue of share is subject to various legal requirements, such as the Companies Act, 2013, and the Securities and Exchange Board of India (SEBI) regulations. The company or partnership firm must comply with the disclosure requirements, such as the filing of offer documents or prospectuses with the Registrar of Companies (ROC) or SEBI, as applicable. The issue must also be made in accordance with the pricing guidelines and other regulations issued by SEBI from time to time.
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