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SHARES
CASE A: ISSUE OF SHARES FOR CASH

A.1. ISSUE OF SHARE FOR CASH AT PAR (at face value)

1. When share application money is received

Bank a/c Dr.
To Share Application a/c

2. When share application money is transferred to share capital a/c

Share application a/c ------------------------- Dr.
To Share Capital a/c

3. When share allotment money is due

Share allotment a/c Dr.
To Share Capital a/c

4. When share allotment money is received

Bank a/c Dr.
To Share Allotment a/c

5. When share 1st call money is due

Share 1st call a/c Dr.
To Share Capital a/c

6. When share 1st call money is received

Bank a/c Dr.
To Share 1st Call a/c

7. When share final call money is due

Share final call a/c Dr.
To Share Capital a/c

8. When share final call is received

Bank a/c Dr.
To Share Final Call a/c

A.2. ISSUE OF SHARE FOR CASH AT PREMIUM (at more than face value)

Case a) When time of premium is not given

3. When allotment money is due
Share Allotment a/c --------------------------- Dr.
To Share Capital a/c
To Securities Premium Reserve

Case b) When time of premium is given

When premium is due
Share Application/ Allotment/1st Call/Final Call a/c – Dr.
To Share Capital a/c
To Securities Premium Reserve a/c
Rest of the entries are same as Case A.1

PREPARED BY: SIDHANT JAIN (M) 70064-34825

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CASE B: ISSUE OF SHARES FOR A CONSIDERATION OTHER THAN CASH

1. When assets are purchased from Vendor

Sundry Assets a/c Dr.
To Vendor a/c

2. When assets and liabilities are taken over i.e. on purchase of Business Sundry Assets
a/c Dr.
Goodwill a/c (bal. fig.) ---------------------------- Dr.
To Sundry Liabilities a/c
To Vendor A/c
To Capital Reserve a/c (bal. fig.)

3. When shares are issued to vendor AT PAR

Vendor a/c Dr.
To Share Capital a/c

4. When shares are issued to vendor AT PREMIUM

Vendor a/c Dr.
To Share Capital a/c
To Securities Premium Reserve a/c

5. When shares are issued to Promoters

Incorporation Expenses a/c -------------------Dr.
To Share Capital a/c

6. When underwriting commission is due to Underwriters

Underwriting Commission a/c ---------------- Dr.
To Underwriters’ a/c

7. When shares are issued to Underwriters

Underwriters’ a/c Dr.
To Share Capital a/c
NOTE:
No. of shares = Amount Due
Issued Price*
Issued Price*
At Par = At Face Value (F.V.)
At Premium = At more than Face Value (F.V. + P)

UNDERSUBSCRIPTION OF SHARES: When shares applied are less than shares

offered/issued.
All entries are same as Case A.1

PREPARED BY: SIDHANT JAIN (M) 70064-34825

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OVERSUBSCRIPTION OF SHARES: When shares applied are more than shares offered.
1. When Share Application money is received
Bank a/c Dr.
To Share Application a/c

2. When Share Application money is adjusted

Share Application a/c-------------------------- Dr.
To Share Capital a/c
To Share Allotment a/c (excess application money)
To Calls in Advance (excess application money)
To Bank (excess application money rejected and returned)

3. When call money is received

Bank a/c Dr.
Calls in advance a/c ------------------------- Dr.
To First/Final call money a/c

FORFEITURE AND REISSUE OF SHARES

CASE A: FORFEITURE AND REISSUE OF SHARES ORIGINALLY ISSUED AT PAR

1. When shares are forfeited

Share Capital a/c (called up value) ---------------Dr.
To Forfeited Shares (amount paid by shareholder)
To Share Allotment a/c (if not paid by shareholder)
To Share 1st Call a/c (if not paid by shareholder)
To Share Final a/c(if not paid by shareholder)

2. When forfeited shares are reissued/sold at face value i.e. AT PAR

Bank a/c Dr.
To Share Capital a/c (called & paid up)

3. When forfeited shares are reissued at less than face value i.e. AT LOSS
Bank a/c (paid up) Dr.
Forfeited Shares a/c (paid up < called up)………..Dr.
To Share Capital a/c (called up)

4. When forfeited shares are reissued at more than face value i.e. AT PROFIT
Bank a/c(paid up) Dr.
To Share Capital a/c(called up)
To Securities Premium Reserve a/c(paid up> called up)

5. When profit on reissue of shares is transferred to Capital Reserve a/c

Forfeited Shares a/c Dr.
To Capital Reserve a/c

PREPARED BY: SIDHANT JAIN (M) 70064-34825

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CASE B: FORFEITURE AND REISSUE OF SHARES ORIGINALLY ISSUED AT PREMIUM

WHEN PREMIUM MONEY IS NOT RECEIVED FROM THE SHAREHOLDER
1. When shares are forfeited
Share Capital a/c (called up value) ---------------------------- Dr.
Security Premium Reserve a/c(not paid by shareholder) Dr.
To Forfeited Shares (amount paid by shareholder)
To Share Allotment a/c (if not paid by shareholder)
To Share 1st Call a/c (if not paid by shareholder)
To Share Final a/c(if not paid by shareholder)

2. When forfeited shares are reissued/sold at face value i.e. AT PAR

Bank a/c Dr.
To Share Capital a/c (called & paid up)

3. When forfeited shares are reissued at less than face value i.e. AT LOSS
Bank a/c (paid up) Dr.
Forfeited Shares a/c (paid up< called up)………….Dr.
To Share Capital a/c(called up)

4. When forfeited shares are reissued at more than face value i.e. AT PROFIT
Bank a/c(paid up) Dr.
To Share Capital a/c(called up)
To Securities Premium Reserve a/c (paid up> called up)

5. When profit on reissue of shares is transferred to Capital Reserve a/c

Forfeited Shares a/c Dr.
To Capital Reserve a/c

WHEN PREMIUM MONEY IS RECEIVED FROM THE SHAREHOLDER

SAME AS CASE A

CONDITIONS OF PRO RATA ALLOTMENT

1. There must be OVERSUBSCRIPTION
2. Excess Application money utilised towards SHARE ALLOTMENT A/C OR CALLS
3. If share holder does not pay SHARE ALLOTMENT MONEY OR CALLS

PREPARED BY: SIDHANT JAIN (M) 70064-34825

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PRACTICAL PROBLEMS
ISSUE OF SHARES FOR CASH AT PAR

1. X ltd. issued 10,000 shares of ₹ 10 each at PAR payable as ₹ 2 on application, ₹ 3 on

allotment and balance in two equal calls. All the shares are subscribed for and allotted. All
the money due was duly received. Give journal entries and prepare balance sheet.

2. Y ltd. issued 1,00,000 shares of ₹ 100 each at PAR payable as ₹ 20 on application, ₹ 30 on

allotment and balance in two equal calls. All the shares are subscribed for and allotted.
All the money due was duly received. Give journal entries and prepare balance sheet.

3. Z ltd. issued 50,000 shares of ₹ 50 each at PAR payable as ₹ 10 on application, ₹ 25 on

allotment and balance on first & final call. All the shares are subscribed for and allotted. All
the money due was duly received. Give journal entries and prepare balance sheet.

ISSUE OF SHARES FOR CASH AT PREMIUM

4. X ltd. issued 10,000 shares of ₹ 10 each at PREMIUM of 20% payable as ₹ 3 on

application, ₹ 5 on allotment and balance in two equal calls. All the shares are subscribed
for and allotted. All the money due was duly received. Give journal entries and prepare
balance sheet.

5. Y ltd. issued 1,00,000 shares of ₹ 100 each at PREMIUM of 10% payable as ₹ 25 on

application, ₹ 35 on allotment and balance in two equal calls. All the shares are subscribed
for and allotted. All the money due was duly received. Give journal entries and prepare
balance sheet.

6. Z ltd. issued 50,000 shares of ₹ 50 each at PREMIUM of 20% payable as ₹ 15 on

application, ₹ 35 on allotment and balance on first & final call. All the shares are subscribed
for and allotted. All the money due was duly received. Give journal entries and prepare
balance sheet.

7. Beena Ltd. Issued 20,000 shares of ₹ 10 each at a premium of ₹ 5 per share payable as
follows:
₹ 4 per share on application, ₹ 5 per share on allotment (including Rs. 3 as premium), Rs. 5
per share on first call (including Rs.2 as premium), Rs. 1 per share on second and final call.
Issue was fully subscribed and money was duly received. Pass necessary journal entries.
Also Show the balance sheet.

ISSUE OF SHARES FOR CASH AT PAR {OVERSUBSCRIPTION}

8. X ltd. issued 10,000 shares of ₹ 10 each at PAR payable as ₹ 2 on application, ₹ 3 on

allotment and balance in two equal calls. Issue was oversubscribed to the extent of
13,000 shares and shares were allotted as
➢ Full allotment was made to the applicants of 9,000 shares
➢ Remaining shares were allotted to the applicants of 9,000 shares
➢ Remaining applications were rejected.
Excess application money was utilised towards allotment and further calls. All the money
due was duly received. Give journal entries and prepare balance sheet.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

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9. Y ltd. issued 1,00,000 shares of ₹ 100 each at PAR payable as ₹ 20 on application, ₹ 30 on

allotment and balance in two equal calls. Applications were received for 1,40,000 shares and
allotment was made as
➢ 70,000 shares were allotted to the applicants of 90,000 shares
➢ Remaining shares were allotted to the other applicants
Excess application money was utilised towards allotment and further calls. All the money
due was duly received. Give journal entries and prepare balance sheet.

10. Z ltd. issued 50,000 shares of ₹ 50 each at PAR payable as ₹ 10 on application, ₹ 25 on

allotment and balance on first & final call. Applications were received for 90,000 shares and
shares were allotted as
➢ Full allotment was made to the applicants of 40,000 shares
➢ Remaining shares were allotted to the applicants of 40,000 shares
➢ Remaining applications were rejected.
Excess application money was utilised towards allotment and further calls. All the money
due was duly received. Give journal entries.

ISSUE OF SHARES FOR CASH AT PREMIUM {OVERSUBSCRIPTION}

11. X ltd. issued 10,000 shares of ₹ 10 each at PREMIUM of 20% payable as ₹ 3 on application,
₹ 5 on allotment and balance in two equal calls. Applications were received for 16,000 shares
and allotment was made as
➢ Full allotment was made to the applicants of 8,000 shares
➢ Remaining shares were allotted to the applicants of 8,000 shares
Excess application money was utilised towards allotment and further calls. All the money
due was duly received. Give journal entries and prepare balance sheet.

12. Y ltd. issued 1,00,000 shares of ₹ 100 each at PREMIUM of 10% payable as ₹ 25 on
application, ₹ 35 on allotment and balance in two equal calls. Applications were received for
1,40,000 shares and allotment was made as
➢ Full allotment was made to the applicants of 60,000 shares
➢ Remaining shares were allotted to the applicants of 80,000 shares.
Excess application money was utilised towards allotment and further calls. All the money
due was duly received. Give journal entries and prepare balance sheet.

13. Z ltd. issued 50,000 shares of ₹ 50 each at PREMIUM of 20% payable as ₹ 15 on application,
₹ 35 on allotment and balance on first & final call. Applications were received for 90,000
shares and allotment was made as
➢ Full allotment was made to the applicants of 30,000 shares
➢ Remaining shares were allotted to the applicants of 50,000 shares.
➢ Remaining applications were rejected.
Excess application money was utilised towards allotment and further calls. All the money
due was duly received. Give journal entries and prepare balance sheet.

14. X Ltd. offered 50,000 Equity shares of ₹10 each at ₹12(i.e. at a premium of ₹2 per share)
payable as follows: ₹3 on application; ₹ 4 on allotment (including premium) ₹2 on first call;
and ₹3 on final call. The public applied for 65,000 Equity Shares. Applications for 40,000
Equity Shares were accepted in full; 10,000 Equity shares were rejected. All money was duly
received except the first call on 1,000 Equity Shares and final call on 1,500 Equity Shares.
Make entries in the cash Book and the journal of the company. Also draw the Balance Sheet.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

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15. X Ltd. was registered with a capital of Rs. 10,00,000 in shares of ₹ 10 each. It issued a
prospectus inviting applications for 10,000 shares and called up ₹ 8 per share as follows:

On application-₹3, on allotment-₹1, On first Call- ₹2 and on second Call ₹2.

Applications were received for 9000 shares. All money was duly received except from
the following:
a) ‘X’ to whom 200 shares were allotted has paid only the application money.
b) ‘Y’ to whom 300 shares were allotted failed to pay calls money.
c) ‘Z’ to whom 400 shares were allotted failed to pay anything after first call money.
Prepare Journal.
d)
16. X ltd. was registered with a capital of ₹1000000 in shares of ₹10 each. It issued a
prospectus inviting applications for 10000 shares and called up ₹8 per share as follows:
On application- ₹ 3, on allotment-₹ 1 On first Call-₹ 2 on second Call-₹ 2
Applications were received for 150000 shares. Applications for 5000 shares were rejected
and letters of regret were sent of such applicants. All money was duly received except from
the following:
‘X’ to whom 200 shares were allotted has paid only the application money.
‘Y’ to whom 300 shares were allotted failed to pay calls money.
‘Z’ to whom 400 shares were allotted failed to pay anything after first call money. Prepare
Journal and Balance Sheet

17. A limited company has a nominal capital of ₹ 250000 in ₹ 10 Shares. Of these 8000 shares
were subscribed for by the public, and during the first year ₹ 5 per share were called up,
payable ₹ 2 on application, ₹ 1 on allotment, ₹1 on first call and ₹ 1 on second call. The
amounts received in respect of these shares were as follows: On 6000 shares the full
amount called, On 1250 shares ₹ 4 per share, On 500 shares ₹ 3 per share. On 250 shares
₹ 2 per share. Give journal entries and prepare the Balance Sheet.

18. X ltd. was registered with a capital of ₹ 1000000 in shares of ₹ 10 each. It issued a
prospectus inviting applications for 10000 shares of ₹ 10 each at a premium of 40% and
called up ₹ 8 per share as follows: On application- ₹ 4(including premium); On allotment- ₹4
(including ₹ 1 premium); On first call- ₹ 2 & On second call-₹2. Applications were received
for 9000 shares. All money was duly received. Prepare journal and Balance Sheet.

19. X Ltd. was registered with a capital of ₹ 1000000 in shares of ₹ 10 each. It issued a
prospectus inviting applications for 10000 shares of ₹ 10 each at a premium of 40% and
called up ₹ 8 per share as follows: On application- ₹4(including ₹ 1 premium);On allotment-
₹2(including ₹ 1 premium); On first call- ₹3 (including ₹ 1 premium); On second call-
₹3(including ₹ 1 premium). Applications were received for 15000 shares. Applications for
3000 shares were rejected and letters for regret were sent to such applicants and prorate
allotment was made to the remaining applicants. All money was duly received. Required:
Prepare journal and Balance Sheet.

20. Bharat Ltd. offered 40000 shares of ₹10 each at 20% premium payable as follows: On
application ₹ 6 (including premium) and balance on allotment.
Public has applied for 65000 shares. Shares were allotted on prorate basis to the applicants.
Money overpaid on applicants was employed on account of sum due on allotment. All the
share holds have paid the amount up to allotment except Mohan, which was alloted 8000
shares. Give journal entries to record the above transaction and show how they will appear
in the company’s Balance Sheet.

21. X Ltd. was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20000
such shares at a premium of ₹ 2 per share, payable as ₹ 2 per share on application, ₹ 5 per
PREPARED BY: SIDHANT JAIN (M) 70064-34825
8|Page SHARES

share on allotment (including premium) and ₹ 2 per share on first call made three months
later. All the money payable on application, and allotment were duly received but when the
first call was made, one shareholder paid the entire balance on his holding of 300 shares,
and another shareholder 1000 shares failed to pay the first call money. Required: Give
journal entries to record the above transaction and show how they will appear in the
company’s Balance Sheet.

22. A limited Company was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and
issued 20,000 such shares at a premium of ₹ 2 per share, payable as ₹ 3 per share on
application, ₹ 4 per share on allotment (including premium) and ₹ 2 per share on first call
made three months later. All the money payable on application and allotment were duly
received but when the first call was made, one shareholder paid the entire balance on his
holdings of 300 shares, and another shareholder holding 1,000 shares failed to pay the first
call money. Give the Journal entries to record the above transactions and show how they
will appear in the company’s Balance Sheet.

23. Govind Ltd. issued a prospectus inviting applications for 20,000 shares of ₹10 each at a
premium of ₹ 3 per share, payable as to ₹ 4 on application; ₹ 5 on allotment (including
premium); ₹ 2 on First call; and ₹ 2 on final call. Applications were received for 27,000
shares. Directors allotted the shares as follows:
To applicant of 16,000 shares __________full allotment
To applicant of 6,000 shares ___________4,000 shares
To applicant of 5,000 shares ___________Nil
Prepare Cash Book and Journal, assuming that all sums due on allotment and calls have
been received.

24. X ltd. Issued shares for ₹ 20, 00,000 divided into shares of ₹ 10 each at a premium of ₹ 5
per share, payable as under:
On Application-₹ 4 per share, On Allotment-₹6 (including premium of ₹ 3), On First and
Final Call Balance. Excess application money was to be adjusted against allotment and first
call and the money on rejected applications was to be returned. The issue was
oversubscribed to the extent of 80,000 shares and the allotment was made as follows:-
Applicants of 1,00,000 shares were allotted 30% shares, applicants for 10,000 shares were
rejected and the remaining applicants were given full allotment. All the money was duly
received. Give journal entries.

25. SM limited was registered with 50,000 shares of ₹ 100 each. It invited 10,000 shares of ₹
100 each payable as follows:
On Application ₹30, On Allotment ₹50, The balance when required.
The company received applications for 15,000 shares and pro-rata allotment was made to
all applicants. Money excess that required on allotment is to be refunded. All the money
was duly received except call money on 300 shares. Journalise these transactions and
prepare cash book. Also show the balance sheet.

26. Ashok limited invited applications for 20,000 shares of ₹10 each payable as follows: ₹ 3
on applications:
₹ 2 on allotment; ₹ 3 on first call and ₹ 2 on second call.
Applications received for 30,000 shares and the allotments were made as follows:
To Applicants for 8,000 shares – Full
To Applicants for 16,000 shares – 12,000 shares
To Applicants for 6,000 shares – Nil.
All money was duly received. Pass necessary journal entries.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

9|Page SHARES

27. Krishna Ltd. issued ₹ 15,00,000 new capital, divided into ₹ 100 shares at a premium of ₹
20 per share payable as follows:
₹ 10 per share on application, ₹ 40 per share and ₹ 10 premium allotment and ₹ 50 per
share and ₹ 10 premium on final payment.

Over payments on application were to be applied towards sums due on allotment and
over payment on application exceeding sums due on allotment were to be returned.

Where no allotment was made money was to returned in full. The issue was
oversubscribed to the extent of 19,500 shares. Applicants for 18,000 shares were allotted
only 1,500 shares and applicants for 3,000 shares were sent letters of regret and
application deposit were returned to them. All the money due on allotment and final call
duly received. Make the necessary entries in the company’s books to record the above
transactions. Also show the company balance sheet.

28. Z Ltd. issues 10,000 shares of ₹ 10 each payable as follows: ₹ 2 on application, ₹ 3 on

allotment, ₹ 2.50 on First Call and the balance on Final Call. All the shares were
subscribed. All the money was duly received except First Call money on 1000 shares
and Final Call money on 1500 shares. Pass necessary journal entries and also show the
Balance-sheet.

29. Shipra Limited invited applications for 80,000 shares of ₹ 10 each payable as follows:
₹ 2.50 on Application (on 1st May, 2021);
₹ 2.50 on Allotment (on 1st June, 2021);
₹ 2 on First call (on 1st Nov., 2021); and
₹ 3 on Second Call (on 1st Feb., 2022)
All the shares were applied and allotted. Shankar, holding 600 shares paid the whole of
the amount along with allotment. Interest on advance was paid to Shankar on 1st Feb.,
2022. Pass Journal entries assuming that books are closed on 31st March every year.

30. A limited company has a nominal capital of ₹ 2,50,000 in ₹ 10 Shares. Of these

8000 shares were subscribed for by the public, and during the first year ₹ 5 per share
were called up, payable ₹ 2 on application, ₹ 1 on allotment, ₹1 on first call and ₹ 1 on
second call. The amounts received in respect of these shares were as follows:
On 6000 shares the full amount called.
On 1250 shares ₹ 4 per share.
On 500 shares ₹ 3 per share.
On 250 shares ₹ 2 per share.
Prepare Journal Entries.

FORFEITURE AND REISSUE OF SHARES(ORIGINALLY ISSUED AT PAR)

31. Sunrise Ltd. issued 1,200 equity shares of ₹ 100 each at par payable as follows: ₹ 10 on
application; ₹ 60 on allotment; ₹ 30 on first and final call. The applications were received for
1,000 shares. All the money was duly received except a holder of 100 shares failed to pay
the allotment money and call money. His shares were forfeited by the company. Journalise
these transactions. Prepare cash book. Also show the balance sheet.

32. Ram limited issued 1,00,000 shares of ₹ 10 each, payable ₹ 3 on application, ₹ 4 on

allotment, ₹ 2 on first call and the balance on final call. Rita the holder of 200 shares failed
to pay allotment and the first call money and her shares were forfeited. After this forfeiture,
the final call was made and Anju the holder of 2,000 shares failed to pay the final call and
her shares were forfeited. Pass the necessary journal entries

PREPARED BY: SIDHANT JAIN (M) 70064-34825

10 | P a g e SHARES

33. Pass Journal entries for the forfeiture and re-issue in the following cases:
a) L Ltd. forfeited 500 shares of ₹ 10 each ₹ 8 called up, on which application and
allotment money of ₹ 3 per share received. Out of these 200 shares were re-issued as
fully paid up for ₹ 8 per share.

b) M Ltd. forfeited 200 shares of ₹ 10 each ₹ 7 called up for non-payment of first call of
₹2 per share. Out of these, 50 shares were immediately re-issued at ₹6 per share.

c) N Ltd. forfeited 800 shares of ₹ 10 each, on which first call of ₹ 3 per share was not
received. The second and final call of ₹ 2 per share has not yet been called out of
these, 300 shares were re-issued at ₹ 8 paid-up for ₹ 7 per share.

34. Geeta Ltd. invited applications for 50,000 shares of ₹ 10 each. Applications were received
for 70,000 shares. Allotment was made proportionately. The amount payable was as follows:
On Application ₹ 3 per share, On Allotment-₹ 5 per share, On First and Final Call- ₹2 per share
The shareholders paid all the amounts except Raghav to whom 200 shares were allotted
failed to pay allotment and call money. His shares were forfeited. These shares were
subsequently re-issued at a discount of 10%.

Journalise these transactions. Prepare cash book. Also show the balance-sheet.
35. A Ltd. Company was registered with an authorized capital of ₹ 2,00,000 in ₹ 10 per share.
Of these 6,000 shares were issued as fully paid to the vendors for the purchase of building.
8,000 shares were subscribed for by the public and during the first year ₹ 5 per share were
called up payable ₹ 2 on application, ₹ 1 on allotment, ₹ 1 on first call and ₹ 1 on second call.
The amount received in respect of these share were as follows:
On 6,000 shares the full amount called On 1,250 shares ₹ 4 per share
On 500 shares ₹ 3 per share On 250 shares ₹ 2 per share.

The directors forfeited 750 shares on which less than ₹ 4 per share had been received.
Journalise these transactions in the books of company.

36. P and J Ltd. Company was established with an authorized capital of ₹ 10,00,000 divided
into shares of ₹ 10 each. 32,000 shares were issued and subscribed for by the public
payable as ₹ 4 on application, ₹2 on allotment, ₹2 on first call and ₹2 on final call. The
amounts received in respect of these shares were as follow:
On 24,000 shares full amount called
On 5,000 shares ₹ 8 per share
On 2,000 shares ₹ 6 per share
On 1,000 shares ₹ 4 per share.

The directors forfeited 3,000 shares on which less than ₹ 8 per share has been paid and re-
issued to Kamal at ₹ 8 per share as fully paid. Pass journal entries in the books of the
company for the record of above transaction.

37. X Ltd. Was registered with an authorized capital of 2,00,000 shares of ₹ 10 each. It
purchased assets of Y Ltd. for ₹ 30, 00,000 and issued fully paid shares for purchase
consideration. It also invited applications for 1, 20,000 shares payable as under:
₹ 2.50 on application, ₹ 2.50 on allotment, ₹ 2 on first call and ₹ 3 on final call

Sarkar, who had been allotted 400 shares failed to pay the final call. His shares were
forfeited and re – issued at ₹ 8.50 per share as fully paid up.

Pass entries in the Cash Book and Journal. Also prepare the opening Balance Sheet of the
Company.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

11 | P a g e SHARES

38. Food Ltd. issued a prospectus offering 10,000 equity shares of ₹ 50 each at par payable as
follows: On Application- ₹15, On Allotment-₹10, On First call-₹15, On Final Call- ₹10
Ram, the holder of 500 equity shares did not pay the amount due on both the calls. These
500 shares were forfeited by the Board of Directors and 300 of these shares were
subsequently re –issued at ₹ 55 per share. Show the entries in the Cash Book and Journal
of the Company. Also prepare the Opening
Balance Sheet.

39. Z Ltd. was registered with an authorised capital of ₹ 10, 00,000 divided into 10,000 shares
of ₹ 100 each. The Company offered 5,000 of these shares to the public, which were
payable ₹ 25 per share on application, ₹ 50 per share on allotment and the balance three
month later. Applications for 7,100 shares were received on which the directors allotted as
follows:
Application for 4,000 Shares Full
Applications for 3,000 Shares 1,000
Applications for 3,000 Shares Nil
₹ 1,85,000 was realized on account of allotment money (excluding the amount carried from
application money) and ₹ 1,15,000 on account of call. The Directors decided to forfeit those
shares on which allotment money was overdue. Show the entries in the company’s books.
40. A, who holds 200 shares of ₹ 100 each, has paid only ₹ 25 per share as application money.
B, who holds 300 shares of ₹ 100 each, has paid ₹ 25 per share on application and ₹ 30
per share on allotment.
C, who holds 400 shares of ₹ 100 each, has paid ₹ 25 per share on application, ₹ 30 per
share on allotment and ₹ 20 per share on first call.
They failed to pay their arrears and the final call. Their shares were forfeited and re –issued
at ₹ 95 per share. Prepare necessary journal entries.

41. Pass journal entries for the forfeiture and re-issue in the following cases:
1. A Ltd. Forfeited 100 shares of ₹ 10 each calls-up non-payment of first call of ₹ 3 per
share and final call of ₹ 3 per share. All of these shares were re-issued as fully paid
for ₹ 10 per share.

2. B Ltd. Forfeited 400 shares of ₹ 10 each fully called –up for non – payment of final
call of ₹ 3 per share. 300 of these shares were re-issued as fully paid for ₹ 8 per
share.

3. C Ltd. Forfeited 700 shares of ₹ 10 each fully called –up on which the holder has
paid application money @ ₹ 3 and allotment money @ ₹ 2 per share. Out of these,
300 shares were re-issued as fully paid @ ₹ 7 per share.

4. D Ltd. Forfeited 1,000 shares of ₹ 10 each fully called-up on which the holder has
paid only the application money @ ₹ 3 per share., Out of these, 600 shares were re-
issued at ₹ 10.50 per share, fully paid up.

42. Pass journal entries for the forfeiture and re-issue in the following cases:
1. X Ltd. Forfeited 700 shares of Ashok of ₹ 10 each ₹ 8 called –up, on which he had
paid ₹ 5 per share. Out of these, 500 shares were re-issued for ₹ 9 per share as fully
paid.

2. Y Ltd. Forfeited 400 shares of ₹10 each, ₹ 6 called-up, for non-payment of first call of
₹ 2 per share. Out of these, 300 shares were immediately re-issued at ₹ 5 per share.

3. Z Ltd. Forfeited 300 share of ₹ 100 each on which first call of ₹ 20 per share was not
received, the second and final call of ₹ 30 per share was not yet been called. Out of
these, 200 shares were re-issued as Rs. 70 paid-up for ₹ 55 per share.
PREPARED BY: SIDHANT JAIN (M) 70064-34825
12 | P a g e SHARES

43. A Ltd. has an authorized capital of ₹ 200000 divided into shares of ₹ 10 each. Of these
6000 shares were issued as fully paid in payment of building purchased from B Ltd. 8000
shares were subscribed for by the public and during the first year ₹ 5 per share was called
up payable as ₹ 2 on application, ₹ 1 on allotment, ₹ 1 on the first call and ₹ 1 on second
call. The amounts received in respect of these shares were as follows:-

On 6000 shares full amounts called

On 1250 shares ₹ 4 per share
On 500 shares ₹ 3 per share
On 250 shares ₹ 2 per share

The directors forfeited the 750 shares, on which less than ₹ 4 per share had been paid.
Give journal entries recording to the above transactions (including cash transactions)
and show howshare capital would appear in the Balance Sheet of the company

44. A Ltd. forfeited 200 Equity Shares of ₹10 each fully called up, held by X for non-payment
of allotment money of ₹3 per Equity Share and final calls Rs.4 per Equity Share. He paid
the application money of ₹3 per share. These shares were reissued to Y for ₹8 per Share.
Give Journal entries for the forfeiture and reissue of shares.

45. Paliwal Exports Ltd. with a share capital of ₹1,00,000 divided into 2,000 Equity of ₹50 each
offers the Equity to the public as under: ₹10 payable on application; ₹10 payable on
allotment; ₹15 payable on first call; and ₹15 payable on second call.

(a) Shareholder ‘A’ who holds 30 Equity shares has paid only the application money.
(b) Shareholder ‘B’ who holds 20 Equity shares has paid application money on 20
Equity shares and allotment money on only 10 Equity shares. He has not paid any
other calls.
(c) Shareholder ‘C’ who holds 18 Equity shares has paid the application and allotment
money.
(d) Shareholder ‘D’ who holds 5 Equity has paid application, allotment and first call
money in full and second call money on 2 only Equity shares.

The company forfeits the shares of the above shareholders who have not paid the
arrears.
Journalise the above transactions including entries relating to bank in the book of Paliwal
Exports Ltd.

46. A Ltd. company was registered with an authorized capital of ₹2,00,000 in ₹10 per Equity
Share, of these6,000 Equity Shares issued as fully paid to the Vendors for the purchase
of building, 8,000 Equity Shares were subscribed for by the public and during the first year
₹5 per Equity Shares were called up, payable ₹2 on application, ₹1 on allotment, ₹1 on first
call and ₹1 on second call. The amounts received in respect of these shares were as
follows:

On 6,000 Equity Shares the full amount called. On 1,250 shares ₹4 per Equity share.
On 500 shares ₹3 per Equity share. On 250 shares ₹2 per Equity share.

The directors forfeited 750 Equity shares on which less than ₹4 per Equity share had
been paid.
Show Journal entries in the books of the company and also shows the share capital as it
would appear in the Balance Sheet.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

13 | P a g e SHARES

47. On 1st April, 2012, Vishwas Ltd. was formed with an authorised capital of ₹10,00,000
divided into 1,00,000 equity shares of ₹10 each. The company issued prospectus inviting
applications for 90,000 equity shares. The company received applications for 85,000 equity
shares. During the first year, ₹8 per share called. Ram holding 1,000 shares and Shyam
holding 2,000 shares did not pay the first call of ₹2 per share. Shayam’s shares were
forfeited after the first call and later on 1,500 of the forfeited shares were re-issued at ₹6
per share, ₹8 called up.

Show the following: Share capital in the Balance Sheet of the company as per Revised
Schedule VI Part I of the Companies Act, 1956. Also prepare ‘Notes to Accounts’ for the
same.

48. On 1st April, 2012, Khanna Ltd. was formed with an authorised capital of ₹20,00,000 divided
into 2,00,000 equity shares of ₹10 each. The company issued prospectus inviting
applications of 1,80,000 equity shares. The company received applications for 1,70,000
equity shares. During the first year, ₹8 per share were called. Shikha holding 2,000 shares
and Poonam holding 4,000 shares did not pay the first call of ₹2 per share. Poonam’s
Shares were forfeited after the first call and later on 3,000 of the forfeited shares were re-
issued at₹6 per share, ₹8 called up. Show the following:
‘Share Capital’ in the Balance Sheet of the company as per revised Schedule VI Part
I of the Companies Act, 1956.

49. Aalam Ltd. has an authorized capital of ₹20,00,000 divided into equity shares of ₹10 each.
The company invited applications for 1,00,000 shares. Applications for 80,000 shares were
received. All calls were made and were duly received except the final call of ₹2 per share
on 1,000 shares. 500 of the shares on
which the final call was not received were forfeited. Show how share capital will appear in
the Balance Sheet of the company as per Schedule VI Part I of the Companies Act 1956.

50. The directors of Chopra Ltd. forfeited 250 shares of ₹10 each at par for the non-payment
of first and final call money of ₹3 per share. These shares were reissued at ₹2,000 fully paid.
Record the journal entries for the forfeiture and reissue of shares. Also, open shares forfeited
account in the books of Chopra Ltd.

FORFEITURE AND REISSUE OF SHARES (ORIGINALLY ISSUED AT PREMIUM)

51. Harsh Ltd. issued 20,000 shares of ₹ 10 each at a premium of ₹ 1 per share, payable ₹ 2
on application, ₹ 4 on allotment (including premium) and ₹ 5 on first and final call. All the
shares were subscribed and allotted. All the money was duly received except allotment and
call money on 100 shares. These shares were forfeited and re-issued as fully paid @ ₹
10.50 per share. Journalise these transactions. Prepare cash book. Also show the balance
sheet.

52. On April 1, 1982 the Directors of Ashok Metals Ltd. issued 60,000 equity share of ₹ 10 each
at ₹ 12 per share, the amount payable as ₹ 5 on application (including premium), ₹ 4 on
allotment and the Balance on July 15, 1982. On April 10, 1982 applications were received
for 80, 000 shares. Of the cash received in excess, ₹ 40,000 were returned and ₹ 60,000
were applied towards the amount due on allotment. The Balance of allotment money was
received on April 30, 1982. All the shareholders paid the call due on July 15, 1982, with the
exception of one shareholder holding 500 shares. These shares were forfeited on August
31, 1982. You are required to submit Journal Entries regarding the above transactions
and also Prepare the Balance Sheet of the company on August 31, 1982.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

14 | P a g e SHARES

53. Gaurav Ltd. issued 15,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount
was payable as follows: ₹ 3 on application, ₹ 4 on allotment (including premium); ₹ 5 on first
and final call. Applications were received for all shares. All the money was duly received
except: Mr. A holder of 1,000 shares has not paid allotment and call money. Mr. B holder
of 2,000 shares has not paid the call money. All the above 3,000 shares were forfeited by
the company. Journalise these transactions.

54. Z Ltd. invited applications for 1,00,000 equity shares of ₹ 100 each at ₹ 110 per share
payable as follows: On Application- ₹20, On Allotment-₹40 (including premium of ₹ 10), On
First Call- ₹30, On Final Call ₹20. All the money was duly received except allotment and
first call money on 1,000 shares.
These shares were forfeited and out of these 400 shares were re-issued credited ₹ 80 paid
for ₹ 72 per share. Journalise these transactions. Prepare cash book and also prepare the
opening balance-sheet.

55. XYZ Ltd. invited applications for 4,00,000 shares of ₹ 10 each issued at ₹ 12 per share. The
payment was to be made as follows: ₹ 3 on application, ₹ 5 on allotment including premium,
and ₹ 4 on call. Applications for 8,00,000 shares were received. Allotment was done
proportionate for remaining applicants. A shareholder holding 500 shares under the
category of full allotment paid full amount due on shares along with allotment money.
Another shareholder holding 1,000 shares failed to pay the amount due on calls. His shares
were forfeited and 800 of these shares were re-issued as fully paid up @ ₹ 8 per share.
Pass necessary journal entries, cash book and also show the balance-sheet.

56. X Ltd. invited applications for 4,00,000 shares of ₹ 10 each. The shares were issued at a
premium of ₹7 per share. The amount was payable as follows:
On Application & Allotment: ₹ 9 per share (including premium ₹4), On First & Final Call:
The Balance amount- (including premium)
Applications were received for 5, 70,000 shares and the allotment was made as under:
(i) To applicants for 3,50,000 shares: 2, 50,000 shares on pro-rata basis.
(ii) To applicants for 2,00,000 shares: 1, 50,000 shares on pro-rata basis.
(iii) To applicants for 2,00,000 shares: NIL

A, who belonged to the first category and was allotted 500 shares, failed to pay the first
call money. B, who belonged to the second category and was allotted 300 shares also
failed to pay the first call money. Their shares were forfeited and re-issued @ ₹ 15 per
share fully paid-up. Pass necessary Cash- Book and Journal entries.

57. Accountancy publication Ltd. Issued 50,000 equity share of ₹ 10 each at a premium of 10%
payable as under: On application ₹ 3; on allotment ₹4 (Premium ₹ 1); on first Call ₹ 2; and
on final Call ₹ 2. The whole of the issue was called for by the company and all the money
were duly received except the allotment and calls money on 500 shares. These shares
were, therefore, forfeited and latte on re-issued at ₹ 9 per share as fully paid. Pass the
necessary Journal entries to record the above transactions.
58. X Ltd. Issued a prospectus offering 2,00,000 share of ₹ 10 each at ₹ 14 per share, payable
as follows: On Application-₹ 4, On Allotment-₹ 6(including premium ₹ 4), On First call- ₹ 3,
On Final call-Balance. Dinesh, the holder of 1,000 shares, did not pay the amount due on
allotment and first call. His shares were forfeited and 400 of these shares were immediately
re-issued credited ₹ 9 paid for ₹ 8.40 per share. Final call was made afterwards and it was
duly received.
Show entries in the Cash Book and the Journal of the company. Also prepare the Opening
balance sheet.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

15 | P a g e SHARES

59. A Co. Ltd offered to the public 20,000 equity shares of ₹ 100 each at a premium of ₹ 10 per
share. The payment was to be as follows:
On Application -₹ 30 per share, On Allotment-₹ 30 per share (including premium), On First
call -₹ 25 per share, On second & final call-₹25 per share

Applications were received for 35,000 shares. Applications for 10,000 shares were rejected.
Applicants for 15,000 were allotted 10,000 share and remaining applications were accepted
in full. The Directors made both the calls. One shareholder holding 500 shares failed to pay
the two calls and as a consequence his shares were forfeited. 200 of these shares were re-
issued as fully paid at ₹ 80 per share. Prepare cash Book, the Journal and the Balance
sheet on the basic of information given above.

60. Elite Ltd. Invited applications from public for 5, 00,000 equity share of ₹ 10 each issued at
₹ 11 per share. The payment was to be made as follows: ₹ 3 on application; ₹4 On allotment
including premium, and ₹ 4 on call. Application for 6, 50,000 shares were received.
Allotment of share was made as follows: (i)100 % share to applicants of 4,00,000 shares;
(ii)50% share to applicants of 2, 00,000 shares, (iii)No allotment to applicants of 50,000
shares. A share holder to whom 500 shares were allotted under category (i) Paid full amount
due on shares along with allotment money. And other share holder holding 1,000 shares
failed to pay the amount due on call. His shares were forfeited and 800 of these shares
were subsequently re-issued as fully paid-up @ ₹ 8 per share. Pas Journal entries and give
Balance sheet of the company.

61. X. Ltd. forfeited 1,000 equity shares of ₹ 10 each issued at a premium of ₹ 3 per share for
the non –payment of final call of ₹ 6 (including premium) per share. The forfeited shares
were re-issued as fully paid up for ₹ 7 per share. Pass necessary Journal entries in the
books of the company.
62. X Ltd. invited applications for 4,00,000 shares of ₹ 10 each. The shares were issued at a
premium of ₹ 7 per share. The amount was payable as follows:
On Application & Allotment : ₹ 9 per share(including premium ₹ 4), On First & Final Call:
The Balance amount (including premium)
Applications were received for 5, 70,000 shares and the allotment was made as under:
i (iv) To applicants for 3, 50,000 shares: 2, 50,000 shares on pro-rata basis.
ii (v) To applicants for 2, 00,000 shares: 1, 50,000 shares on pro-rata basis.
iii (vi) To applicants for 2,00,000 shares : NIL

A, who belonged to the first category and was allotted 500 shares, failed to pay the first
call money. B, Who belonged to the second category and was allotted 300 shares also
failed to pay the first call money. Their shares were forfeited and re-issued @ ₹ 15 per
share fully paid-up. Pass necessary Cash- Book and Journal entries.

63. A Ltd. forfeited 800 shares of ₹10 each issued at 20% premium (to be paid at the time of
allotment) for non – payment of a final call of ₹ 2 per share. Out of these, 600 shares were
re-issued as fully paid-up for ₹ 13 per share. Journalise.

64. B Ltd. forfeited 500 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) for non – payment of the first call of ₹ 3 per share and final call of ₹ 2 per share.
Out of these, 300 shares were re-issued as fully paid –up for ₹ 10 per share. Journalise.

65. C Ltd. forfeited 300 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) for non – payment of the first call of ₹ 4 per share and final call of ₹ 3 per share.
Out of these, 200 shares were re-issued as fully paid –up for ₹ 3 per share. Journalise.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

16 | P a g e SHARES

66. X Ltd. forfeited 1, 000 shares of ₹ 10 each (₹ 8 called –up) issued at a premium of ₹ 2 per
share to Mr. R, for non-payment of allotted money of ₹ 5 per share(including premium). Out
of these, 800 shares were re-issued to Mr. Sanjay as ₹ 8 called for ₹ 7 per share.

67. Y Ltd. forfeited 100 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) on which first call money of ₹ 3 was not received; the final call money of ₹ 2 is
not yet called. These shares were subsequently re-issued at ₹ 7 per share as ₹ 8 paid –up.
Give necessary journal entries regarding forfeited and re-issue of shares.

68. Y Ltd. forfeited 2,000 shares of ₹ 10 each issued at 20% premium (to be paid at the time of
allotment) on which first call money of ₹ 4 (including premium) and first call money of ₹ 3
was not received; the final call money of ₹ 4 (including premium) and first call money of ₹ 3
was not received; the final call money of ₹ 2 is not yet called. 1,500 of these shares were
re-issued as fully paid for ₹ 7 per share. Journalise.

69. Z Ltd. forfeited 1,200 shares of ₹ 100 each, issued at a premium of 30% to Dinesh on which
he had paid application money of ₹ 15 per share and allotment money of ₹ 50 per share
(including premium), for non-payment of a first call of ₹ 10 per share. Out of these, 500
shares were re-issued as fully paid for ₹ 105 per share. Journalise.

70. Z Ltd. forfeited 700 shares of ₹ 100 each, issued at a premium of 30% to Ghanshyam on
which he had paid application money of ₹ 35 per share and allotment money of ₹ 50 per
share (including premium), for non-payment of a first call of ₹ 15 per share. Out of these,
400 shares were re-issued as ₹ 70 paid-up for ₹ 65 per share. Journalise.

71. 500 shares of ₹ 10 each, issued at a premium of ₹ 1 on which ₹ 8(including premium) was
called and ₹ 6 (including premium) was paid, have been forfeited. 400 of these shares were
re-issued as fully paid for ₹ 7. Journalise.

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

73. Anil applied for 2000 shares of ₹ 10 each at a premium of ₹ 2.50 per share. But he was
allotted only 1000 shares. After having paid ₹ 3 per share on application, he did not pay
allotment money of ₹ 4.50 per share (including premium) and on his subsequent failure to
pay the first call of ₹ 2 per share, his shares were forfeited. These shares were re-issued at
the rate of ₹ 8 per share credited as fully paid. Give journal entries to record the forfeiture
and re-issue of shares assuming that the company follows the practice of adjusting the
excess application money towards the other sums due on shares.

74. Shri Hari Ltd. forfeited 150 shares of ₹10 each, ₹8 called up for non-payment of allotment
money of ₹5 per share and first call of ₹2 per share. These shares were issued at premium
of ₹4 per share (to be paid at the time of allotment). 60 of these forfeited shares were
reissued @ ₹8 per share. Final call was not made till reissue. Pass journal entries for
forfeiture and reissue of forfeited shares. Also, open shares forfeited account in the books
of Shri Hari Ltd.

75. XYZ Ltd. forfeited 100 shares of ₹10 issued at a premium of ₹1 per share for non-payment
of allotment money of ₹3 (including premium) per share and first call money of ₹3 per share
was yet to be made. These shares were reissued at₹8 per share, credited as fully paid.
Pass journal entries to record forfeiture and open shares forfeited account.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

17 | P a g e SHARES

76. National Heavy Chemicals Ltd. issued 5,000 shares of ₹10 each at a premium of ₹2 per
share for public subscription, payable as ₹5 on application and ₹7 on allotment (including
premium). Rajesh who was allotted 200 shares by the company failed to pay the allotment
and his shares were forfeited by the company. 100 out of these forfeited shares were
allotted to Brijesh as fully paid up for ₹8 per share. Record these transactions relating to
forfeiture and reissue of shares.

77. The directors of a company forfeited 200 shares of ₹10 each issued at a premium of ₹3 per
shares, for non-payment of the first call money of ₹3 per share. The final call of ₹2 per share
has not been made. Half the forfeited shares were reissued at ₹1,000 fully paid. Record the
journal entries for the forfeiture and reissue of shares.

78. X Ltd. forfeited 1, 000 shares of ₹ 10 each (₹ 8 called –up) issued at a premium of ₹ 2 per
share to Mr. R, for non-payment of allotted money of ₹ 5 per share (including premium). Out
of these, 800 shares were re-issued to Mr. Sanjay as ₹ 8 called for ₹ 7 per share. Record
the journal entries for the forfeiture and reissue of shares.

79. X Ltd. forfeited 1,000 shares of ₹ 20 each issued at a premium of ₹ 2 per share to Ashok (₹
18 called-up) on which he did not pay allotment of ₹ 6 (including premium) and first call of
₹4. Give Journal Entries for forfeited and re-issue in the following cases:
(i) 600 shares were re-issued to Mohan at ₹ 14 per share as ₹ 18 paid up;
(ii) 200 shares to Sohan as fully paid –up for ₹ 24 per share;
(iii) 200 shares to Suresh as fully paid-up for ₹ 10 per share at different intervals of time.

80. C Ltd. forfeited 800 shares of ₹ 20 each issued at a premium of ₹ 2 per share to Mahesh (₹
18 called-up) on which he did not pay first call of ₹ 4. Of these, 300 shares were re-issued
@ ₹ 15 per share as ₹ 18 paid-up. Journalise.

PRO-RATA ALLOTMENT

81. A Ltd. Co. Invites application for 50,000 equity shares of ₹ 10 each payable as follows:
On Application- ₹ 3, On allotment-₹ 4, On First Call-₹ 2, On Final call-Balance
Applications were received for 70,000 shares. Allotments were made on the following
bases:
(i) To applicant for 10,000 shares – in full.
(ii) To applicants for 60,000 shares – 40,000 shares.
Excess money paid on applications was utilized toward allotment money. A share holder
who was allotted 1,000 shares out of the group applying for 60,000 shares failed to pay
allotment money and money due on calls. These shares were forfeited. 600 forfeited shares
were re-issued as fully paid on receipt of ₹ 8 per share. Prepare cash book and Journal
entries in the books of company.

82. Jai Ltd. issued a prospects inviting applications for 1, 00,000 shares of ₹ 10 each. These
shares were issued at par on the following terms: On applications ₹ 2,50, On allotment ₹
2.50, On first call ₹ 3 and on final call the Balance.
Applications were received for 1, 35,000 shares. Allotments were made on the following
bases:
(i) To applicants for 25,000 shares –in full;
(ii) To applicants for 60,000 shares – 45,000 shares.
(iii) To applicants for 50,000 shares--30,000 shares.

All excess amount paid on applications is to be adjusted against amount due on allotment.
The shares were fully called and paid –up except the amount of allotment, first and final call
not paid by those who applied for 4,000 shares of the group applying for 50,000 shares. All
PREPARED BY: SIDHANT JAIN (M) 70064-34825
18 | P a g e SHARES

the shares on which calls were not paid were forfeited by the board of Directors. 1,800
forfeited shares were re-issued as fully paid on receipt of ₹9 per share. Prepare cash Book
and Journal Entries to record the above.

83. Nav Laxmi Ltd. issued a prospectus inviting applications for 50,000 shares of ₹ 10 each.
These shares were issued at par on the following terms. On application ₹ 3, on allotment ₹
4, on first call ₹ 2 and on final call the balance.

Applications were received on 60,000 shares. Allotments were made on the following basis:
(1) To applicants for 10,000 shares-full.
(2) To applicants for 20,000 shares-15,000 shares.
(3) To applicants for 30,000 shares-25,000 shares.

All excess amount paid on applications is to be adjusted against amount due on allotment.
The shares were fully called and paid up except the amount of allotment first and final calls
not paid by those applied for 2,000 shares of the group applying for 20,000 shares. All the
shares on which calls were not paid were forfeited by the Board of Director 1,000 forfeited
shares were re-issued as fully paid on receipt of ₹ 8 per share. Journalise these transactions
in the books of Nav Laxmi Ltd.

84. AB Ltd. invited applications for issuing 1, 00,000 equity shares of ₹ 10 each. The amount
was payable as follows:
On Application-₹ 3 per share, On Allotment-₹ 3 per share, On 1st & Final Call-₹ 4 per share.
Application for 1,50,000 shares were received and pro-rata allotment was made to all
applicants as follows:
Applicants for 80,000 shares were allotted 60,000 shares on pro-rata basis.
Applicants for 70,000 shares were allotted 40,000 shares on pro-rata basis.

Sudha, to whom 6, 00 shares were allotted out of the group applying for 80,000 Shares
failed to pay the allotment money. Her shares were forfeited immediately after allotment.
Asha, who had applied for 1,400 shares out of the group applying for 70,000 shares failed
to pay the first and final Call. Her shares were also forfeited. Out of the forfeited shares
1,000 were re-issued @ ₹ 8 per share fully paid-up. The re-issued shares included all the
forfeited shares of Sudha. Pass necessary Journal entries to record the above transaction.

85. X Ltd. offered 25,000 shares of ₹ 100 each payable as ₹ 25 on application, ₹ 20 on

allotment, ₹ 30 on first call and the balance on final call. Applications were received for
40,000 shares out of which shares were allotted to the applicants for 35,000 shares on a
pro-rata basis. All share holders paid the allotment money excepting Mr. Gopal who was
allotted 500 shares. These shares were forfeited immediately. The first call was made
thereafter. The forfeited shares were re-issued @ ₹ 78 per share, ₹ 75 paid up. The final
call was not made. Prepare cash book and pass journal entries.

86. A limited Company invited applications for 50000 equity shares of ₹ 10 each payable as
follows:
On Application-₹ 3, On Allotment-₹ 4, On first call- ₹ 2, On final call the balance.
Applications were received for 55,000 shares. Allotments were made on the following basis:

(i) To applicants for 35000 shares-in full. (ii) To applicants for 2000 shares 15000 shares.
Excess money paid on application was utilized towards allotment money. A shareholder
who was allotted 1500 shares out of the group applying for 20000 shares failed to pay
allotment money and money due on calls. These shares were forfeited 1000 forfeited shares
were re-issued as fully paid on receipt of ₹ 8 per share. Required: Show the journal entries
in the books of company.

PREPARED BY: SIDHANT JAIN (M) 70064-34825

19 | P a g e SHARES

87. Hindustan Steel Ltd. invited applications for 50, 000 equity shares of ₹ 10 each at a premium
of ₹ 4 per share. The amount was payable as follows:
On Application-₹ 4 (including premium ₹ 2), On Allotment-₹ 6(including premium ₹ 2), On
1st & Final Call-Balance
Applications for 60,000 shares were received. Allotment was made to all the applicants on
pro-rata basis. Excess application money was adjusted towards sums due on allotment.
Ram, to whom 500 shares were allotted, failed to pay the call money. These shares were
forfeited. The forfeited shares were re-issued @ ₹ 8 per shares fully paid-up. Pass the
necessary Journal entries.

88. Tushar Ltd. Invited applications for issuing 3,00,000 equity shares of ₹ 10 each at a premium
of ₹ 4 per share. The amount was payable as follows:
On Application ₹ 8 (including premium) and Balance on allotment.
Applications for 4, 00,000 shares were received. Pro-rata allotment was made to all
applicants. Excess money received on applications was adjusted towards sums due on
allotment. A shareholder to whom 1,800 shares were allotted failed to pay the allotment
money and therefore, his shares were forfeited. Later on the forfeited shares were re-issued
for ₹ 15,000 as fully paid up. Pass necessary Journal Entries in the Books of Tushar Ltd.

89. Suzuki Ltd. issued a prospectus inviting applications for 60, 000 shares of ₹ 10 each at a
premium of 30% payable as follows : On Application ₹3.50; On Allotment ₹ 5.50 (including
premium): On First Call ₹ 2 and on Second Call ₹ 2. Applications were received for 95,000
shares and allotment was made pro-rata to applicants of 80,000 shares. Money over-paid
on applications were employed on account of sums due on allotment. X, to whom 1,500
shares were allotted, failed to pay the allotment money and on his subsequent failure to pay
the First Call his shares were forfeited. Y, the holder of 2,400 shares failed to pay the two
calls and his shares were forfeited after the Second Call. Of the shares forfeited 3,000
shares were sold to Z as fully paid. Z paying ₹ 8.50 per share, the whole of Y’s share being
included. Give Journal entries, Prepare Bank Account and Balance Sheet.

90. A company issued for public subscription 60,000 equity shares of ₹ 10 each at a premium
of ₹ 4 per share, payable as under: ₹ 4 on application; ₹ 5 on allotment (including premium),
₹ 2.50 on First Call & ₹ 2.50 on Final Call. Applications were received for 75,000 equity
shares. The shares were allotted pro –rata to the applicants for 70,000 shares, the
remaining applications being rejected. Money over-paid on applications was utilized
towards sums due on allotment.

A, to whom 1,200 shares were allotted failed to pay allotment and calls money and B, to
whom 1,800 shares were allotted failed to pay two calls. These shares were subsequently
forfeited after the final call was made. All the forfeited shares were sold to Rajesh as fully
paid-up at ₹ 11 per share. Record Journal entries.

91. A company issued 10,000 shares of ₹ 10 each at a premium of ₹ 1 per share, payment to
be made as follows:
On Application-₹3, On Allotment-₹4(including premium), On first call- ₹2,On second & final
call- ₹2.

Applications were received for 20,000 shares. Applications for 5,000 shares were rejected
and allotment was made proportionately to the remaining applicants. The Directors made
both the calls and all the money were received, except the allotment, First call and final Call
on 400 shares, which were subsequently forfeited. Later, 300 of the forfeited shares were
re-issued as fully paid @ ₹ 15 per share. Give Journal entries to record the above. Also
prepare the Balance Sheet.

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92. A company issued for public subscription 60,000 equity shares of ₹ 10 each at a premium
of ₹ 4 per share, payable as under: ₹ 4 on application; ₹ 5 on allotment (including premium),
₹ 2.50 on First Call & ₹ 2.50 on Final Call.
Applications were received for 75,000 equity shares. The shares were allotted pro –rata to
the applicants for 70,000 shares, the remaining applications being rejected. Money over-
paid on applications was utilized towards sums due on allotment. A, to whom 1,200 shares
were allotted failed to pay allotment and calls money and B, to whom 1,800 shares were
allotted failed to pay two calls. These shares were subsequently forfeited after the final call
was made. All the forfeited shares were sold to Rajesh as fully paid-up at ₹ 11 per share.
Prepare Cash Book and Journal Entries required to record the above transaction.

93. X Ltd. invited applications for issuing 80,000 equity shares of ₹ 10 each at a premium of ₹
2 per share. The amount was payable as follows:
On application ₹ 6 (including premium) per share, On allotment ₹ 3 per share, Balance on
first and final call. Applications for 90,000 shares were received. Applications for 5,000
shares were rejected and pro-rata allotment was made to the remaining applicants. Over
payment received on application was adjusted towards sums due on allotment. All call were
made and were duly received except the allotment and final call on 1,600 shares allotted to
Vijay. These shares were forfeited and the forfeited shares were re-issued for ₹ 18,400 fully
paid up. Pass necessary Journal entries.

94. A company issued for public subscription 40,000 equity shares of ₹ 10 each at a premium
of ₹ 2 per share payable as follows:
On Application-₹ 3 per share, On Allotment-₹ 4 per share (including premium), On First
Call-₹ 2 per share, On Second Call-₹ 3 per share. Applications were received for 70,000
shares. Allotment was made pro-rata to the applicants for 50,000 shares, the remaining
applications being refused. Money overpaid on application was applied towards sum due
on allotment. A, to whom 1,600 shares were allotted failed to pay the allotment and calls
money. B, to whom 2,000 shares were allotted, failed to pay the two calls. The shares of A
and B were subsequently forfeited after the second call was made. 3,000 of the forfeited
shares were re-issued at ₹ 8 per share fully paid. The re-issued shares included all of A’s
shares. Pass Journal Entries.

95. Modern Ltd. issued a prospectus inviting applications for 2, 00,000 shares of ₹10 each at a
premium of ₹6 Per share, payable as follows.
On Application -₹ 5 (including premium ₹ 2)
On Allotment-₹ 5 (including premium ₹ 2)
On 1st Call -₹ 3(including premium ₹ 1)
On 2nd & Final Call-₹ 3(including premium ₹ 1)
Applications were received for 2, 60,000 shares and pro-rata allotment was made to the
applicants for 2,50,000 shares. Excess money paid on applications for these shares was
utilized towards allotment.
A, who applied 1,000 shares, failed to pay the allotment money and his shares were forfeited
after allotment.
B, who applied for 1,500 shares, failed to pay the two calls and his shares were also
forfeited.
Of the shares forfeited, 1,800 shares were re-issued as fully paid up for ₹ 15 per share, the
whole of the B’s share being included. Prepare Cash Book, Journal and Balance Sheet.

96. X Ltd. offered to the public 10,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share
payable as follows: On application ₹ 3; on allotment (including premium) ₹ 4; on first call ₹
3 and on second and final call ₹2. Applications were received for 15,000 shares. All
applications were placed under four categories and allotment was made as follows:

PREPARED BY: SIDHANT JAIN (M) 70064-34825

21 | P a g e SHARES

Category A: to applicant of 4,000 shares _____in full

Category B: to applicant of 6,000 shares _____4,000 shares
Category C: to applicant of 3,000 shares _____2,000 shares
Category D: to applicant of 2,000 shares _____NIL

Except in the case where applications were wholly rejected, excess application money was
not to be refunded but to be adjusted against moneys due on allotment and calls.
A, an applicant under category B to whom 400 shares were allotted failed to pay the
allotment money and, on his failure, to pay the first call his shares were forfeited.
B, an applicant under category c to whom 300 shares were allotted failed to pay both the
calls and his shares were also forfeited. 500 of the shares thus forfeited were re-issued to
C as fully paid for ₹ 8 per share.
Show Cash Book, Journal Entries and prepare the Balance sheet in the books of the
company; you are to assume that the whole of the A’s shares were issued to C.

97. X Ltd. invited applications for issuing 80,000 equity shares of ₹ 10 each at a premium of ₹
2 per share. The amount was payable as follows: On application ₹ 6 (including premium)
per share, On allotment ₹ 3 per share, Balance on first and final call. Applications for 90,000
shares were received. Applications for 5,000 shares were rejected and pro-rata allotment
was made to the remaining applicants. Over payment received on application was adjusted
towards sums due on allotment. All call were made and were duly received except the
allotment and final call on 1,600 shares allotted to Vijay. These shares were forfeited and
the forfeited shares were re-issued for ₹18,400 fully paid up. Pass necessary Journal entries
in the books of the company.

98. Vinod papers Ltd. invited applications for issuing 1,00,000 shares of ₹ 10 each at a premium
of ₹ 4 per share payable as follows:
On Application -₹ 4(including premium ₹2), On Allotment-₹ 4(including premium ₹2), On
First & Final Call-₹ 6
Applications were received for 1, 30,000 shares and pro-rata allotment was made to all
applicants as follows:
i (i) Applicants for 80,000 shares were allotted 60,000 shares, and
ii (ii) Applicants for 50,000 shares were allotted 40,000 shares.

X who belonged to the first category and was allotted 900 shares failed to pay the allotment
and call money. Y, who belonged to the second category and who applied for 1,000 shares
also failed to pay the allotment and call money. Their shares were forfeited and 1,400 of the
forfeited shares were re-issued @ ₹ 9 per share as fully paid. Re-issued shares included
whole of Y’s shares. Prepare Cash Book, Journal Entries and an opening Balance Sheet.

99. Sanjeev Ltd. issued 3,00,000 equity shares of ₹ 10 each at a premium of ₹ 4 per share,
payable as follows:
₹ 4 on application (including ₹ 1 premium)
₹ 3 on allotment (including ₹ 1 premium)
₹ 4 on first call (including ₹ 1 premium)
₹ 3 on second and final call (including ₹ 1 premium)

Applications were received for 5,00,000 shares of which applications for 1,50,000 shares
were rejected and their money was refunded. Rest of the applicants were issued shares on
pro-rata basis and their excess money was adjusted money was adjusted towards
allotment.

Ram to whom 6,000 shares were allotted failed to pay the allotment money and his shares
were forfeited after allotment. Sohan who applied for 10,500 shares failed to pay the two

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22 | P a g e SHARES

calls and on his such failure, his shares were forfeited. Mohan who was allotted 3,000
shares did not pay the final call. 13,000 forfeited shares were re-issued as fully paid on
receipt of ₹ 9 per share, the whole of Sohan’s shares being included. Pass necessary
journal entries, prepare cash book.

100. Ganesh Ltd. issued a prospectus inviting applications for 20,000 shares of ₹ 10 each at a
premium of ₹ 4 per share, payable as follows:
On Application ₹ 4 (including premium ₹1)
On allotment ₹ 3 (including premium ₹1)
On first Call ₹ 3 (including premium ₹1)
On Second and Final Call ₹ 4 (including premium ₹1)
Applications were received for 30,000 shares and pro-rata allotment was made on the
applications for 24,000 shares. It was decided to utilize excess application money towards
the sums due on allotment.
X, who was allotted 500 shares failed to pay the allotment money and on his subsequent
failure to pay the first call, his shares were forfeited.
Y, who applied for 1,800 shares, failed to pay the two calls and his shares were forfeited
after the second call. Of the shares forfeited, 1,700 shares were re-issued as fully paid up
for ₹ 8 per share, the whole of Y’s shares being included. Prepare Cash Book, Journal and
Balance Sheet.

ISSUE OF SHARES FOR CONSIDERATION OTHER THAN CASH

101. Ram Ltd. Purchased machinery costing ₹ 2,50,000 from Hari Ltd. Payment made is as
under:
(1) ₹50,000 in cash. (2) Balance was payable by issuing shares of ₹10 each at par.

102. D Pharma Ltd. Purchased machinery worth ₹ 10,00,000 from M. Pharma Ltd. ₹ 5,50,000
were paid by issue of 9% preference shares of ₹100 each at a premium of 10%. The balance
was paid in cash by cheque. Pass necessary journal entries in the Books of D. Pharma Ltd.

103. Rohit Ltd. Purchased assets from Rohan & Co., for ₹ 3, 50,000. A sum of ₹ 75,000 was paid
by means of a bank draft and for the balance due Rohit Ltd. Issued Equity Shares of ₹10
each at a premium of 10%. Journalise the above transactions in the books of the Company.

104. Sundram Ltd. purchased furniture for ₹3,00,000 from Ravindram Ltd. ₹1,00,000 were paid
by drawing a Promissory Note in favour of Ravindram Ltd. the balance was paid by issue
of equity shares of ₹10 each at a premium of 25%.Pass necessary journal entries in the
books of Sundram Ltd.

105. Vimal Ltd. purchased machinery of ₹9,90,000 from Kamal Ltd. The payment to Kamal Ltd.
was made by issuing equity shares of ₹100 each. Pass necessary journal entries in the
books of Vimal Ltd for purchase of machinery and the issue of shares when: (i) Shares were
issued at par.(ii) Shares were issued at 25% premium.

106. Hari Ltd. purchased furniture of ₹2,50,000 from M Furnitures. Payment was made as
under:(i) ₹50,000 in cash, (ii) Balance was payable by way of issuing equity shares of ₹100
each at par. Journalise.

107. Pass necessary journal entries for the following transactions in the books of Sewak Ltd:

(a) Sewak Ltd. acquired assets of ₹5,00,000 and liabilities of ₹3,00,000 of Goodwill Ltd, for
a purchase consideration of ₹1,35,000. Payment to Goodwill Ltd. was made by issuing
equity shares of ₹ 10 each at a discount of 10%.

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23 | P a g e SHARES

(b) Purchased machinery of ₹5,00,000 from Ramprastha Ltd. The payment to Ramprastha
Ltd. was made by issuing equity shares of ₹10 each at a premium of 25%.

108. Pass necessary journal entries for the following transactions in the books of Rajan Ltd:

(a) Rajan Ltd. purchased machinery of ₹7,20,000 from Kundan Ltd. The payment was made
to Kundan Ltd. by issue of equity shares of ₹100 each at 10% discount.

(b) Rajan Ltd. purchased a running business from Vikas Ltd. for a sum of ₹2,50,000 payable
as ₹2,20,000 in fully paid equity shares of ₹10 each and balance by bank draft. The
assets and liabilities consisted of the following: Plant and Machinery ₹90,000; Building
₹90,000; Sundry Debtors ₹30,000; Stock ₹50,000; Cash ₹20,000; Sundry Creditors
₹20,000.

109. Pass necessary journal entries for the following transactions in the books of Gopal Ltd:
(a) Purchased Furniture for ₹2,50,000 from M/s Furniture Mart. The payment to M/s
Furniture Mart was made by issuing equity shares of ₹10 each at a premium of 25%.
(b) Purchased a running business from Aman Ltd. for a sum of ₹15,00,000. The payment
of ₹12,00,000 was made by issue of fully paid equity shares of ₹10 each and balance by
bank draft. The assets and liabilities consisted of the following: Plant ₹3,50,000; Stock
₹4,50,000; Land and Building ₹6,00,000; Sundry Creditors ₹1,00,000.

110. X coy. Purchased assets of the book value of ₹10, 45,000 from Y Co. It was agreed that
the purchase consideration be paid by issuing 14% debentures of ₹ 100 each. Assume
debenture have been issued (i) at par; (ii) at the premium of 10%. Give Journal entries in
the books of X Co.

PREPARED BY: SIDHANT JAIN (M) 70064-34825