Date

WN - 1 Resource Test WN-2 Shares Outstanding Test

Particulars Amount Particulars
A Sh Cap 800 No. of shares outstanding 80
B Sec Prem 100 25% 20
C GR 780
D P&L 120
E Shareholders Funds (A+B+C+D) 1800
F 25% of D 450
G Buyback price 20
H No. of shares (F/G) 22.5
Date Particulars Amount Amount

Bank a/c Dr 320

TO Invest 320

Inv a/c Dr 20
To Profit on sale of inv 20

Share Buyback a/c Dr 320

To Bank 320

Share Capital Dr 160

Sec Prem a/c Dr 100
General Reserve Dr 60
To Share Buyback 320

Genreal Reserve a/c Dr 320

To Capital Red Res 320
 Date

WN- 1 No. of shares buy back

ESC 60 600
25 % of 240= 60 lakh shares Prem 60 300
Total buy back amt 900

WN- 2 Calculation of Capital Redemption Reserve

Face value of shares buy back 600
Fresh issue of pref shares 200
Balance by way of free reserves 400 Transfer to CRR

WN - 3 Calculation of no. of shares issued by way of bonus

Total no. of shares 240

Less: No. of shares buy back 60
Equity shares held 180
Bonus issue 45
Face Value of Bonus shares 450
Date Particulars Amount Amount

Bank a/c Dr 150

To Investment 150
(Being inv sold)

Investmnet a/c Dr 2
TO Profit on sale of inv 2
(Being profit on sale of inv transferred)

Bank a/c 200

TO Pref Share Application 200

Pref Share Application Dr 200

To 14% Pref Sh Capital 200

Share Buyback a/c Dr 900

To Bank 900

Equity Share Capital Dr 600

Sec Prem Dr 300
To Share Buyback 900

General Reserve Dr 400

To Capital Redemption Reserve 400

Bonus to Share holders Dr 450

To Share Capital 450

Capital Redemption Reserve Dr 400

Sec. Prem Dr 50
To Bonus to shareholders 450
WN - 1 Resource Test

Particulars Amount
Eq shares 1250000
Sec Prem 250000
Revenue Reserve 1500000
P&L 125000
Total shareholder's funds 3125000
25% of shareholders funds 781250
Buyback price 20
No. of shares 39063

WN -2 Shares outstanding test

Particulars Amount
No. of shares outstanding 125000
25% of outstanding shares 31250

WN - 3 Debt Equity Ratio Test

Particulars Amount
Debt (1875000+1000000+1650000) 4525000
Debt equity ratio to be maintained 02:01
Min equity 2262500
Present equity (Shareholder’s funds) 3125000
Maximum possible dilution in equity 862500
Buy-back price 20
Amount to be transferred to CRR per share 10
Shares to be bought back 28750
WN - 4 No. of shares to be bought back

Particulars Amount
A As per resource test (WN - 1) 39630
B As per Shares Outstanding Test (WN - 2) 31250
C As per Debt Equity Ratio Test ( WN -3) 28750

Shares buy buck Actual 25000

Buyback is permitted

Date Particulars Amount Amount

Share buyback a/c Dr. 500000
To Bank 500000
(Being 25000 shares bought back @ Rs 20)

Eq share capital Dr250000

Security premium DR 250000
To Share Buyback 500000
(Being 25000 eq shares cancelled)

Revenue Reserve a/c Dr 250000

To Capital Red Reserve 250000
 WN

WN

Shares Buyback a/c Dr 112.5

TO buyback 112.5

Eq Share Capital Dr 37.5

Sec Prem Dr 75
To Share Buy back 112.5

Gr Dr 37.5
To CRR 37.5
WN - 1 Resource Test

Particulars Amount
Eq shares

Sec Prem
Revenue Reserve
P&L
Total shareholder's funds 750
25% of shareholders funds 187.5
Buyback price 30
No. of shares 6.25

WN -2 Shares outstanding test

Particulars Amount
No. of shares outstanding 33
25% of outstanding shares 8.25

WN - 3 Debt Equity Ratio Test

Particulars Amount
Debt 1200
Debt equity ratio to be maintained 02:01
Min equity 600
Present equity (Shareholder’s funds) 750
Maximum possible dilution in equity 150
Buy-back price 30
Amount to be transferred to CRR per share 10
Shares to be bought back 3.75