Past Year Questions: Company Accounts | Accounting for CA Foundation PDF Download
Q 1. State with reasons, whether the following statements are True or False: (2 Marks Each)
(i) For redemption of preference shares, proceeds from the fresh issue of equity shares and debentures can be utilised.
Answer: False. The redemption of preference shares can be done either from the proceeds of fresh issue of shares or by capitalisation of undistributed profit or a combination of both. But the proceeds from the issue of debentures cannot be utilised for redemption of preference shares.
Q 2. R Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amounts were payable as follows: (15 Marks, May 2025)
On application & allotment - ₹ 6 per share (including premium)
Balance on the First & Final Call
Applications were received for 2,50,000 shares. Applications for 1,00,000 equity shares were rejected and pro-rata allotment was made to the remaining applicants. The first & final call was made. The amount was duly received except on 3,000 shares applied by Ms. Jane. Her shares were forfeited.
The forfeited shares were reissued as fully paid-up @ ₹ 8 per share.
Pass necessary Journal entries to record the above transactions in the books of R Ltd.
Answer: Journal entries in the books of R 
Working notes: 1.
*6,00,000 less 3,00,000
** ₹ 3,000,00 less ₹ 6,000.
2. Number of shares allotted to Ms. Jane = 3,000 x 1,00,000 / 1,50,000 = 2,000 shares
3. Calculation of calls in arrear
Calculation of amount Transferred to Capital Reserve
Q 3. A company had issued 20,000, 8% partly convertible debentures of ₹ 100 each on April 1, 2023. The debentures are due for redemption on June 1, 2024. The terms of issue of debentures provided that 30% of the debentures will be converted into equity shares (Nominal Value ₹ 10) at a price of ₹ 20 per share and remaining will be redeemable at a premium of 5%. (5 Marks, Jan 2025)
(i) Calculate the number of equity shares to be allotted to the debenture holders at the time of conversion.
(ii) Give the necessary journal entries related to the conversion and redemption of debentures assuming that the company has created the Debenture Redemption Reserve and also invested the required amount for redemption of debentures at the time of issue. Debenture Redemption Reserve Investment are sold at par value.
Answer: 
Journal Entries 
Q 4. Arpit Ltd., with an authorized capital of ₹ 20,00,000 divided into Equity shares of ₹ 10 each, on 1st June, 2023, invited applications for issuing 3,00,000 Equity shares at a premium of ₹ 5 per share. The amount was payable as follows: (15 Marks, Jan 2025)
On Application: ₹ 2 per share
On Allotment (1st July, 2023): ₹ 7 (including premium) per share
On First call (1st Nov., 2023): ₹ 3 per share
On Final call (1st Jan., 2024): ₹ 3 per share
All the shares were applied for and allotted. Mr. Naresh who held 20,000 shares paid the whole of the amount due on calls along with allotment money. The final call was fully paid except a shareholder having 5,000 shares who paid his due amount on 1st March, 2024 i.e. after 2 months along with interest on calls in arrears @ 10% p.a. Company also paid interest @ 12% p.a. on calls in advance to Mr. Naresh on 1st Jan., 2024.
Give journal entries with narrations to record all these transactions in the books of Arpit Ltd.
Answer: In the books of Arpit Ltd Journal Entries 
Calculation of Interest on Calls in Advance & Calls in Arrears: 
Q 5. XYZ Ltd. an unlisted company issued 6000, 12% debentures of ₹ 100 each at a discount of 5% on 01.04.2021. Interest is payable annually on 31st March every year. The debentures are redeemable at premium of 10% in 3 equal annual installments beginning from 31.03.2022. The company invested in specified securities for the redemption of debentures. Entire loss on issue to be booked in the 1st year. (10 Marks, Sep 2024)
You are required to pass journal entries for all the 3 years.
Answer: In the Books of XYZ Ltd.
Journal Entries 
Q 6. P Limited issued 6,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share, payable as ₹ 3 on application, ₹ 5 on allotment (including premium) and the balance in two calls of equal amount. Applications were received for 8,00,000 shares and pro-rata allotment was made to all the applicants. The excess application money was adjusted towards allotment. Harish to whom 1600 shares were allotted, failed to pay both calls, and his shares were subsequently forfeited after the second call. (15 Marks, Sep 2024)
Answer: 
Bank Account 
You are required to pass journal entries in the books of P Limited and prepare the bank account.
Q 7. The following is the abstract of Balance Sheet of Happy Ltd. as on 31 March, 2024: (10 Marks, Jun 2024)
On 1st April, 2024, the company makes final call @ ₹ 6 each on 40,000 equity shares. The call money is duly received by 30th April, 2024.
On 1st May, 2024, the Board of Directors of the company decided:
(i) To forfeit the share on which final call of ₹ 2 each is due;
(ii) To re-issue the forfeited share @ ₹ 11 each as fully paid up;
(iii) To issue fully paid bonus shares in the ratio of one fully paid bonus share for every two fully paid shares held;
(iv) To use a minimum balance of Profit and Loss Account.
Pass necessary journal entries in the books of the company based on the above decisions.
Answer: Journal Entries in the books of Happy Ltd. 
Working Notes: 
Q 8. The following balances appeared in the Books of Mac Ltd. as on 31 December, 2023: (15 Marks, Jun 2024)
Under the terms of their issue, the preference shares are redeemable on 31st March, 2024 at a premium of 5%. In order to finance the redemption, the company makes a right issue of 60,000 equity shares of ₹ 100 each at a premium of 10%, ₹ 25 being payable on application, ₹ 45 (including premium) on allotment and the balance on 1st August, 2024. The issue was fully subscribed and the allotment made on 1st March, 2024. The amount due on allotment was duly received by 25th March, 2024.
The preference shares were redeemed after fulfilling the necessary conditions of section 55 of the Companies Act, 2013.
You are required to pass the necessary Journal Entries (including narrations) to give effect to the above arrangement. Also prepare the Notes to accounts on Share Capital, Reserves and Surplus relevant to the Balance Sheet immediately after the redemption of preference shares as on 31st March, 2024. Ignore date column in Journal.
Answer: Journal Entries In the books of Mac Ltd. 
Notes to Accounts: 
Working Note 1: Amount to be transferred to Capital Redemption Reserve on Redemption:
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FAQs on Past Year Questions: Company Accounts - Accounting for CA Foundation PDF Download
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