WORKSHEET 1 RATIO ANALYSIS

1 Give the formula of current ratio and interest coverage ratio. 1

2 state any two items included in current assets and current liabilities. 1

3 Give the formula of Return of Investment (return on capital employed) ratio and Debt- 1
equity ratio.

4 X ltd liquidity ratio is 2.5:1. Stock is Rs. 6,00,000. Current ratio is 4:1.Find out the 2
current liabilities.
( Ans.-Rs. 400,000)

5 X ltd. Has a current ratio 4.5:1 and a quick ratio of 3:1. If its inventory is Rs. 36,000. 3
Find out its total current assets and total current liabilities.
( ans.-. C L Rs.24,000 ;C A Rs.1,08,000and Quick assets Rs. 1,72,000)

6 What is included in long term debts. 1

7 Net profit before interest and tax Rs.4,00,000; 15% long term debt Rs. 8,00,000; 2
shareholders’ fund Rs. 4,00,000. Calculate return on investment.(ans.- 33.33%)

8 X ltd has a term loan of Rs. 10,000. Interest on the loan for the year is Rs. 1,25,000 1
and its profit before interest and tax is Rs. 5,00,000. Calculate interest coverage ratio.
(ans.- 4 times)

9 Debt Equity ratio of X ltd. Is 2:1. What is the effect of conversion of debenture into 1
preference share.

10 Total assetsRs. 12,50,000; total debts Rs. 10,00,000; current liabilities Rs. 5,00,000. 2
Calculate debt equity ratio.
(ans-2:1)

Prepared by: Shweta dhiman (kvafschandinagar)

WORKSHEET 2 RATIO ANALYSIS

1 Inventory turnover ratio is 3 times. Sales are Rs. 1,80,000; opening inventory Rs. 2,000 3
more than the closing inventory. Calculate opening and closing inventory when goods
are sold at 20% profit on cost. (ans opening inventory 51,000and closing Rs. 49,000)

2 Calculate amountof gross profit and sales from the following information: 4
Average inventory is Rs. 80,000; inventory turn over ratio=6 times; selling price is 25%
above cost. (ans.-G P=1,20,000; sales= 6,00,000)

3 Calculate trade receivables or debtor turnover ratio and average collection period. 3
Credit revenue from operation (net credit sales) for the year is Rs. 6,00,000; debtors Rs.
50,000; bills receivables Rs. 50,000.(ans.- 6 times; 2 months)

4 Working capital=Rs.2,50,000; cost of revenue from operation Rs.10,00,000; gross profit 3

on sales 20%.calculate working capital turnover ratio.(ans-5 times.)

5 Calculate operating ratio when cost of revenue from operation is Rs. 6,00,000; operating 2
expenses Rs. 40,000; revenues from operation Rs. 8,00,000. (ans.-80%)

6 What will be operating profit ratio if operating ratio is 85%. 1

7 Operating ratio of a company 80% state which of the following transaction will 4
increase/decrease/not alter the operating ratio?
1) purchase of stock in trade Rs. 7,000
2) revenue from operation Rs. 500
3) drawings of goods cosing Rs. 2,000
4) paid income tax Rs. 7,000.
WORKSHEET 3 RATIO ANALYSIS

1 Fill in the blanks:

A Current ratio=………………………./………………………………

B Acid test ratio=current asset-…………-………….

………………………………….

C Debt-equity ratio=…………………………….
……………..funds

D Total assets to debt ratio=………………………………./…………………………………..

E Proprietary ratio=shareholders funds/………………………………………………

F Interest coverage ratio=profit…………….interest and tax

………………………….

G Inventory turnover ratio=cost of…………………………………….

………………………………..

H Trade receivable turnover ratio=………………………………………………..

Average trade receivables

I Trade payable turnover ratio=net credit…………………………….

……………………………………

J Working capital turnover ratio=……………………………………………../working capital

K Gross profit=…………………………………….X100
…………………………

M …………………………..ratio=cost of revenue from operation+ operating expensesX100

Revenue from operations

N Operating profit ratio=……………………………………….X100

……………………………….

O Net profit ratio=…………………………………………./………………………..

P …………………………………………….=profit ………….. interest tax and dividend X100

Capital employed
 WORKSHEET 1 CASH FLOW STATEMENT

1 Preparation of cash flow statement is guided by which Accounting Standard? 1

2 Identify activities as operating/investing/financing/cash and cashequivalent ineach of 2

thefollowing
1)interest received on loans granted by financial company
2)payment of dividend on equity shares
3)rent received on building
4)bank overdraft
3 State whether following activities will result into inflow/outflow/no flow of cash 2
1)purchase of goods on credit
2) sale proceed of building
3) proposed dividend
4) purchase of fixed assets at 10% less cost price
4 Calculate cash flow from operating activities 4
Particulars 2003(Rs.) 2004(Rs.)
Debtors 42,000 46,000
Prepaid expenses 2,000 2,700
Accured income 1,500 1,200
Biils receivables 14,000 12,000
Income received in advance 800 1,000
Billspayable 13,000 11,000
Creditors 26,000 28,000
Outstanding expenses 8,000 6,000

Profit earned during 2004 amouniedRs. 1,00,000 after taking into account the following
adjustments:
1) profit on sale of investment is Rs. 2,000
2) losson sale of machine Rs. 900
3) goodwill amortized Rs. 3,000
4) Depreciation charged 2,900
(Rs 1,00,600)
5 From the following Balance sheet, prepare a cash flow statement as per AS- 6
3.

Particulars 31.03.12 31.03.11

I. Equity &liabilities:
(1) shareholders funds:
(a) share capital 1,50,000 1,20,000
(b) reserve & surplus 60,000 50,000
(2) current liabilities:
Trade payables 1,10,000 1,50,000
3,20,000 3,20,000
Total
II. Assets :
(1) Non-current assets :
Fixed assets 80,000 50,000
(2) current assets :
(a) inventory 40,000 60,000
(b) Trade receivables 80,000 1,00,000
(c) cash & cash 1,20,000 1,10,000
equivalent
3,20,000 3,20,000
Total

A dividend of 30,000 was paid during the year 2011-12.

Answer : cash from operating activities 40,000 ; cash used investing
activities
(30,000) ; cash from financing activities nil.
WORKSHEET 2 CASH FLOW STATEMENT

1 From the following information , calculate cash flow from investing activities: 4
Particulars Closing(Rs.) Opening(rs.)
Machinery(at cost) 4,20,000 4,00,000
Accumulated depreciation 1,10,000 1,00,000
Patents 1,60,000 2,80,000
Additional information:
1. during the year , a machine costing Rs. 40,000 with accumulated depreciation of Rs.
24,000 was sold for Rs. 20,000.
2. patents were written off to the extent of Rs. 40,000 and some patents were sold at a
profit of Rs. 20,000.
(Ans. Rs. 60,000)

2 ABC ltd. Provide the following information. Calculate cash from financing activities: 4
particulars 31/03/2014(Rs.) 31/03/2013(rs.)
Equity share capital 15,00,000 10,00,000
10%debentures - 1,00,000
Loan from bank 2,00,000 -
Additional information
1. Interest paid on debentures Rs. 10,000.
2. dividend paid Rs. 50,000
3. During the year 2013-14, XYZ ltd. Issued bonus shares in the ratio of 2:1 by capitalizing
reserves.
(ans- Rs.40,000)

3 State any two objectives of preparing of cash flow statement. 1

4 List any two activities resulting inflow of investing activities in a cash flow statement. 1

Prepared by: Shweta Saxena (kvpitampuradelhi )

 Work sheet 1 (Share capital)

ISSUE OF SHARES AT PAR and PREMIUM

Time: 30 min. m.marks:18

1 Define Authorized Capital. 1

2 Define Issued Capital. 1

3 Define Subscribed Capital. 1

4 Define subscribed and fully paid share. 1

5 Define subscribed and not fully paid share. 1

6 Full form of OPC. 1

7 Full form of ESOP. 1
8 What is calls in arrears? 1

9 Define ‘Calls –in-advance’ 1

10 What is rate of interest on call in arrear and call in advance according to 1

table F of company act 2013?

11 P ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each . The 3
whole amount was payable on application. The issue was fully subscribed. Pass
necessary journal entries.

12 Q ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a 3
premium of Rs. 3 . The whole amount was payable on application. The issue was
fully subscribed. Pass necessary journal entries.

13 State any two purpose for which securities Premium reserve can be utilized. 2
 Work sheet 2

Issue of share for consideration other than cash

Time:30 min
M.Marks:15

1 What is meant by shares issued for consideration other than cash? 1

2 Vimal ltd. Purchase Machinery of 9,90,000 from Kamal Ltd. .The payment to 6
Kamal Ltd. Was made by issuing equity shares of Rs. 100 each.Pass necessary
journal entries in the books of Vimal Ltd. For purchase of machinery and issue
of shares when
a) Issue of share are at par.
b) Issue of shares were issued at 25% prem.

3 Marinal Ltd. Purchased a business from Kunal Ltd. For a sum of Rs. 8
44,00,000 by issuing 40,000 fully paid equity shares of Rs. 100 each at a
premium of 10%. The assets and liabilities consisted of the following:
Plant and Machinery Rs. 14,00,000 , Debtors Rs. 5,00,000, Inventory Rs.
10,00,000, Building Rs. 23,00,000, and creditors Rs. 5,00,000.
Pass necessary J.E, in the books of Mrinal Ltd. For the above transactions.
 Work sheet 3 (Share capital)

Oversubscription of shares

Time:30 M.M:20

1 What is meant by ‘Pro rata allotment of shares’? 1

2 Give two alternatives available to a company for the allotment of shares in case of 2
oversubscription.

3 Give Difference between Over-Subscription and Under-Subscription Of shares 3

3 Preeti& Co. Ltd. Was registered with an authorized capital of Rs. 6
10,00,000/- divided into 1,00,000 shares of Rs.10 each. The company
offered 60,000 shares to the public-which were payable Rs.2 per share
on application: Rs.4 on allotment and the balance when required.
Applications for 92000 shares were received on which the Directors
allotted as follows:
Applications for 40,000 shares-Full
Applicants for 50,000 shares-40%
Applicants for 2,000 shares –NIL
Rs.1,72,000 was realized on account of allotment money
(excluding the amount carried from application money)
Show the journal Entries recording the above

4 Sangama Ltd. Issued Rs. 10,00,000 new capital divided into Rs. 100 shares at 8
a premium of RS. 20 per share, payable as under:
On application : Rs. 10 per share
On allotment : Rs. 40 per share (including premium of Rs. 10 per
share)
On first and final call: balance
Over payments on application were to be applied towards sums due on
allotment and first and final call. Where no allotment was made, money was to
be refunded in full.
The issue was oversubscribed to the extent of 13,000 shares. Applicants for
12,000 shares were allotted only 2,000 shares and applicants for 3,000 shares
were sent letters of regret. Shares were allotted in full to the remaining
applicants.
All the money was duly received.
a) Which value has been affected by rejecting the applicants of the
applicants who had applied for 3,000 shares? Suggest a better
alternative for the same.
b) Give journal entries to record the above transactions (including cash
transactions ) in the books of the company.
 Work sheet 4 (Share capital)

Forfeiture and Reissue of shares

Time: 40 min. M.M:20

1 What is the maximum permissible discount at which forfeited shares can be 1

reissued?

2 XYZ Ltd. issued 5,000 equity shares of Rs.10 each at par payable. On 2
application Rs.2 per share, on allotment Rs.3 per share, on first call Rs.3 per
share and on second call Rs.2 per share. Mr X was allotted 40 shares. He
failed to pay first call and final call and his shares were forfeited. Give
journal entries for forfeiture of shares.

3 A company issues 10,000 equity shares of the valur of Rs.10 each, payable 3
Rs.3 on application, Rs.3 on allotment and Rs.4 on first and final call. All
amounts were received except the call money on 100 shares. These shares
were forfeited and are resold as fully paid for Rs.500. Give necessary journal
entries.

4 Record the journal entries for forfeiture and reissue in the following cases: 6
a) Xerox Ltd. Forfeited 200 shares of Rs. 100 each ,Rs, 70 called up, on
which the shareholders had paid application and allotment money of
 Rs.. 50 per share. Out of these, 150 shares were reissued to Namisha
as Rs. 70 paid up for Rs. 80 per share.
b) Yamuna Ltd. Forfeited 180 shares of Rs. 10 each, Rs, 8 called up,
issued at a premium of Rs. 2 per share to Rama for non-payment of
allotment money of Rs 5 per share (including premium). Out of
these, 160 shares were reissued to Samita. As Rs. 8 called up for Rs.
10 per share fully paid up.

5 AB Ltd. invited applications for 1,00,000 equity shares of Rs.10 each, 8

payable as Rs.2 on application, Rs.3 on allotment and the balance on first
and final call. Applications were received for 3,00,000 shares and the shares
were allotted on a pro rata basis. The excess application money was to be
adjusted against allotment only. M, a shareholder, who had applied for 3,000
shares, failed to pay the call money and his shares were accordingly forfeited
and reissued @ Rs.8 per share as fully paid.
Pass necessary journal entries.
 Work sheet 5(debentures)

Issue of Debentures at par, premium from redemption point of time

Time:30 M.M:15

1 Define debenture. 1

2 Why would an investor prefer to invest in debentures of a company 1

rather than in its shares?

3 Give any one point of distinction between a share and a debenture 1

4 P ltd. Invited applications for issuing 9% 5,00,000 debentures of Rs. 10 each . 4

The whole amount was payable on application. The issue was fully subscribed.
Pass necessary journal entries.

5 Pass journal entries for the issue of debentures in the following cases- 8
a) Rs. 40,000; 15% debentures of Rs. 100 each issued at
par, redeemable at par.
b) Rs. 40,000; 15% debentures of Rs. 100 each issued at
premium of 10% , redeemable at par.
c) Rs. 40,000; 15% debentures of Rs. 100 each issued at
par, redeemable at premium of 10%
d) Rs. 40,000; 15% debentures of Rs. 100 each issued at
premium of 10%, redeemable at premium of 10%
 Work sheet 6(debentures)

Issue of Debentures for consideration other than cashans issue of debentures as collateral
security

Time: 30 min M.M: 12

1 Give the meaning of ‘Issue of Debentures as a collateral security’. 1

2 Sumedha Ltd. purchased Machinery from Hira Ltd. for Rs.8,40,000 . 3

Sumedha Ltd. issued 9% Debentures of Rs.100 each at a premium of 20%.
Pass necessary journal entries in the books of Sumedha Ltd.

3 Pass the necessary Journal entry when 10,000 debentures of Rs. 100 each are 4
issued as collateral security against a Bank loan of Rs. 8,00,000.

4 4
X Ltd. obtained a loan of Rs. 4,00,000 from IDBI Bank. The company issued
5000, 9% Debentures of Rs. 100 each as a collateral security for the same.
Show how these items will be presented in the Balance Sheet of the
company.

BY: Ms. JASDEEP KAUR PGT COMMK.V.NO.1 PATIALA

 WORKSHEET -1

REDEMPTION OF DEBENTURES

TIME-40MNTS MARKS-10
Q.N. QUESTIONS MARKS
1 A Ltd. Issued Rs. 6,00,0008% , deb. Of Rs. 100 each redeemable after 3 4
years either by draw of lots or by purchase in the open market. At the end
of three years, finding the market price of deb. At Rs. 95 per deb. It
purchased all its deb. For immediate cancellation. Pass journal entry for
cancellation of deb. Assuming that company has sufficient balance in
D.R.R.
Ans: gain on cancellation of deb. Rs. 30,000, general reserve 3,00,000

2 Z Ltd. Had Rs. 5,00,000 10% deb. Outstanding on 1st April, 2013. On the 3
same date the company purchased Rs. 1,00,000 own deb. at 98% as
investment from the open market . pass journal entries for purchase.

3. Amit Ltd. Has 4,000 , 8% Deb. of Rs. 100 each due for redmption on 3
march 31,2015.the company has a D.R.R. of Rs. 1,15,000 on that date.
Assuming that no interest is due record the necessary journal entry at the
time of redemption of Deb.
Ans: Rs. 85,000 will be transferred from P&L app. a/c to D.R.R. and the
balance of this a/c Rs. 2,00,000 will be transferred to general reserve a/c.
 WORKSHEET-2
REDEMPTION OF DEBENTURE
TIME-30MNTS MARKS-10

1 R Ltd.issuedRs. 6,00,00,000 10% deb. Divided in to deb. Of Rs. 100 each 6

on 1st April, 2007redemmable in four equal annual instalment starting from
1st April, 2009. The directors have decided to create D.R.R. of Rs.
75,00,000 on 31st March 2008 and 2009. Record necessary journal entries
at the time of redemption of deb. And creation of D.R.R.

Ans: transfer from DRR to General Res. Rs. 1,50,00,000

2 3
ABC Ltd. Purchased for cancellation its own 5,000, 9%
Debentures of 100 each for 95 per debenture. The brokerage
charges 15,000 were incurred. Calculate the amount to be
transferred to capital reserve.

Sol.
Amount of profit on redemption to be transferred to capital reserv=
10,000

3 How much amount transfer to DRR as per section 71(4) of 1

companies act 2013
 WORKSHEET-3
REDEMPTION OF DEBENTURE
TIME-30MNTS MARKS-10

1 3
Explain with an imaginary example how issue of debenture as
collateral security is shown in the balance sheet of a company
when it is recorded in the books of accounts.

(Sol. Alfa Ltd. obtained Loan of 1, 00,000 from Indian Bank and
issued 1200, 10% Debentures of 100 each as Collateral security.
(or any other example)

2 6

Ruchi Ltd issued 42,000, 7% Debentures of 100 each on 1st

April, 2011, redeemable at a premium of 8% on 31St March
2015. The Company decided to create required Debenture
Redemption Reserve on 31st March 2014. The company
invested the funds as required by law in a fixed deposit with
State Bank of India on 1st April, 2014 earning interest @10% per
annum. Tax was deducted at source by the bank on interest
@10% per annum. Pass necessary Journal Entries regarding
issue and redemption of debentures.

3 How much amount transfer to DRI as per section 71(5) of 1

companies act 2013
WORKSHEET-4
REDEMPTION OF DEBENTURE
TIME-30MNTS MARKS-10

1 3
 A.Ltd. purchased its own debentures of the face value of Rs.2,00,000 from
the open market for immediate cancellation at Rs.92. Record the journal
entries
(Ans.- profit on cancellation Rs 16000)

2 Give the name of two types companies which are not required to open 1
DRR.

3 Dipesh Ltd redeemed its 8,000, 11 % Debentures of Rs. 100 each in the 6
following manner;

(i) 4,000 debentures were purchased @ Rs. 95.

(ii) 3,000 debentures were purchased @ Rs. 93
(iii) 1,000 debentures were purchased @ Rs. 97.50.
(iv) The expenses on purchase of own debentures amounted to Rs.
200. The debentures were purchased for immediate
cancellation. Pass journal entries.

BY PANKAJ VERMA KV BALRAMPUR

Work sheet 1
solution 0F ISSUE OF SHARES AT PAR , PREM
1 Define Authorized Capital. 1
 Capital as is authorized by Memorandum of Company to be maximum amount of share
capital of the company.
2 Define Issued Capital. 1
Company issues from time to time for subscription
3 Define Subscribed Capital. 1
Such part of capital which is for the time being subscribed by the members of a company.
4 Define subscribed and fully paid share. 1
Share which company has called up its entire nominal value and has also received it.
5 Define subscribed and not fully paid share. 1
Share which company has either called up its entire nominal value but has not received it or
the company has not called up its entire nominal value.
6 Full form of OPC. 1
One person company
7 Full form of ESOP. 1
Employee stock option Plan
8 What is calls in arrears? 1
It refers to that part of capital which is not received
9 Define ‘Calls –in-advance’ 1
When a company accepts money paid by some of its allot tees for the calls not yet
due, such amount is known as ‘Calls –in-advance’. It may also happen in case of
partial or pro-rata allotment of shares when the company retains excess amount
received on application of shares.
10 What is rate of interest on call in arrear and call in advance according to table F of 1
company act 2013?
Call in arrear 10% & call in advance 12%
11 P ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each . The whole 2
amount was payable on application. The issue was fully subscribed. Pass necessary journal
entries.
Particulars Dr. Cr.
Bank a/c …….. Dr. 50,00,000
To Equity share application & 50,00,000
allotment
Equity share application & allotment…Dr. 50,00,000
To Equity share capital a/c 50,00,000
12 Q ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a premium of 3
Rs. 3 . The whole amount was payable on application. The issue was fully subscribed. Pass
necessary journal entries.
Particulars Dr. Cr.
Bank a/c …….. Dr. 65,00,000
To Equity share application & 65,00,000
allotment
Equity share application & allotment…Dr. 65,00,000
To Equity share capital a/c 50,00,000
To Securities Premium reserve 15,00,000
13 State any two purpose for which securities Premium reserve can be utilized. 2
a) For issue of fully paid shares.
b) For writing off preliminary expenses.

Work sheet 2
Solution of of share for consideration other than cash
1 What is meant by shares issued for consideration other than cash? 1
 That share against which the company has not received cash instead has received
assets or services.
2 Vimal ltd. Purchase Machinery of 9,90,000 from Kamal Ltd. .The payment to Kamal 6
Ltd. Was made by issuing equity shares of Rs. 100 each.Pass necessary journal entries
in the books of Vimal Ltd. For purchase of machinery and issue of shares when
c) Issue of share are at par.
d) Issue of shares were issued at 25% prem.
Particulars Dr. Cr.
Machinery a/c…..Dr. 9,90,000
To Kamal Ltd. 9,90,000
Case 1
Kamal Ltd……….Dr. 9,90,000
To Equity share capital A/c 9,90,000
Case 2
Kamal Ltd……….Dr. 9,90,000
To Equity share capital A/c 7,92,000
To Securities premium reserve 1,98,000
3 Marinal Ltd. Purchased a business from Kunal Ltd. For a sum of Rs. 44,00,000 8
by issuing 40,000 fully paid equity shares of Rs. 100 each at a premium of
10%. The assets and liabilities consisted of the following: Plant and Machinery
Rs. 14,00,000 , Debtors Rs. 5,00,000, Inventory Rs. 10,00,000, Building Rs.
23,00,000, and creditors Rs. 5,00,000.
Pass necessary J.E, in the books of Mrinal Ltd. For the above transactions.
Solution:
Particulars Dr. Cr.
Plant and Machinery A/c Dr. 14,00,000

Debtors A/c Dr. 5,00,000

Inventory A/c Dr. 10,00,000

Building A/c Dr 23,00,000
To creditors A/c 5,00,000
To Kunal Ltd. A/c 44,00,000
To Capital Reserve A/c 3,00,000

Kunal Ltd……….Dr. 44,00,000

To Equity share capital A/c 40,00,000
To Securities premium reserve 4,00,000
Work sheet 3

Marking scheme of Oversubscription

1 What is meant by ‘Pro rata allotment of shares’? 1

Allotment of shares on proportionate basis
2 Give two alternatives available to a company for the allotment of shares in case of 2
oversubscription.
a) Rejecting excess applications
b) Pro rata allotment.
3 . 3
Basis Over-Subscription Of Under-Subscription Of
shares shares
 1.Shares Number of shares Number of shares applied is
applied applied is more than less than the shares offered
the shares offered for for subscription
subscription
2.Acceptance All applications are not All the applications for
accepted. Some are shares are accepted, i.e., full
rejected. Alternatively, allotment is made
shares are allotted on
pro rata
3.Refund Excess application As all the applications are
money is to be accepted, there is no excess
refunded or adjusted money to be refunded
towards allotment and
calls.
4.Minimum A company does not A company may face the
face such a problem
4 Preeti& Co. Ltd. Was registered with an authorized capital of Rs. 6
10,00,000/- divided into 1,00,000 shares of Rs.10 each. The company
offered 60,000 shares to the public-which were payable Rs.2 per share
on application: Rs.4 on allotment and the balance when required.
Applications for 92000 shares were received on which the Directors
allotted as follows:
Applications for 40,000 shares-Full
Applicants for 50,000 shares-40%
Applicants for 2,000 shares –NIL
Rs.1,72,000 was realized on account of allotment money
(excluding the amount carried from application money)
Show the journal Entries recording the above

JOURNAL DATE PARTICULARS L.F. Dr.(Rs.) Cr.(Rs)

Bank A/c …Dr.(92,000xRs.2) 1,84,000
To Share Application A/c 1,84,000
(Being the application money
received for 92000 shares at Rs.2
per share)
Share Application A/c …Dr. 1,24,000
To Share Capital a/c (60,000x2) 1,20,000
To Bank A/c(2000x2) 4,000
(Being the allotment made
as follows: Applicants for rs.40000
shares –Full, Applicants for 50,000
shares-40%, Applicants for 2,000
shares –NIL)
Share Allotment A/c …Dr. 2,40,000 2,40,000
To Share Capital a/c
(Being the allotment due on
60,000 shares @ Rs.4 per
share)
 Share Application A/c 60,000 60,000
…Dr.(note.1)
To Share Allotment a/c
(Being the surplus application
money adjusted on allotment of
20,000 shares)
Bank A/c …Dr. 1,72,000 1,72,000
To Share Allotment A/c(note 2)
(Being the amtrecd on allotment
except on 2000 shares)

5 1 Bank A/c 2,30,000

To share application A/c 2,30,000
2 Share application A/c 2,30,000
To share capital A/c 1,00,000
To share allotment A/c 80,000
To calls in advance A/c 20,000
To bank A/c 30,000
3 Share allotment A/c 4,00,000
To share capital A/c 3,00,000
To S.P. A/c 1,00,000
4 Bank A/c 3,20,000
To share allotment A/c 3,20,000
5 Share first and final A/c 7,00,000
To share capital A/c 6,00,000
To S.P. A/c 1,00,000
6 Bank A/c 6,80,000
Calls in advance A/c 20,000
To Share first and final call A/c 7,00,000

Value  Equal distribution of

wealth violated here
Work sheet 4

Forfeiture and Reissue of shares

1 Amount that the company has forfeited. 1

2 Share forfeited amount Rs.200 3
3 Share forfeiture A/c 600, Capital Reserve A/c 100 3

4 a) Share capital A/c 14,000 6

To share calls A/c 4,000
To share forfeited A/c 10,000
 Bank A/c 12,000
To share capital A/c 10,500
To s. p. A/c 1,500
Share forfeited A/c 7,500
To Capital Reserve A/c 7,500
b) Share capital A/c 1,440
Security premium A/c 360
To share allotment A/c 900
To share forfeited A/c 900

Bank A/c 1,600

To share capital A/c 1,280
To s. p. A/c 320

Share forfeited A/c 800

To Capital Reserve A/c 800
5 App. Money2,00,000; Bank Refund 1,00,000 ;Allotment nil,Share forfeiture 8
A/c Rs. 5000, Capital Reserve A/c Rs.3000.

Work sheet 5

Issue of Debentures at par, premium from redemption point of time

Define debenture. 1
A debenture means an acknowledgement of debt which contains a contract
for repayment of principal and payment of interest at a fixed rate
2 Why would an investor prefer to invest in debentures of a company rather 1
than in its shares?
Ans. An investor would like to invest in debentures because there is
always an assured return and less risk
3 Give any one point of distinction between a share and a debenture. 1
Ans. A share is an ownership security and receives dividend as return.
A Debenture is a creditorship security and receives interest as return.

4 P ltd. Invited applications for issuing 9% 5,00,000 debentures of Rs. 10 each . 4

The whole amount was payable on application. The issue was fully subscribed.
Pass necessary journal entries.

Particulars Dr. Cr.

Bank a/c …….. Dr. 500,000
To Debenture application & 500,000
allotment
Debenture application & 500,000
allotment…Dr. 500,000
To 9%Debenture capital a/c
5 Pass journal entries for the issue of debentures in the following cases- 8
e) Rs. 40,000; 15% debentures of Rs. 100 each issued at par,
redeemable at par.
f) Rs. 40,000; 15% debentures of Rs. 100 each issued at
 premium of 10% , redeemable at par.
g) Rs. 40,000; 15% debentures of Rs. 100 each issued at par,
redeemable at premium of 10%
h) Rs. 40,000; 15% debentures of Rs. 100 each issued at
premium of 10%, redeemable at premium of 10%

Particulars Dr Cr Amount
Amount
Bank A/c - Dr. 40,000
To Debenture Application&Allotment A/c 40,000
(Being application &allotment money recd.)

Debenture Application& Allotment A/c - Dr. 40,000

To 15% Debenture A/c 40,000
(Being Issue of debentures at par and redeemable
at par)

Bank A/c - Dr. 44,000

To Debenture Application&Allotment A/c 44,000
(Being application &allotment money recd.)
Debenture Application& Allotment A/c - Dr. 44,000
To 15% Debenture A/c 40,000
To Securities Premium A/c 4,000
(Being Issue of debentures at par and redeemable
at par)
Bank A/c - Dr. 40,000
To Debenture Application&Allotment A/c 40,000
(Being application &allotment money recd.)

Debenture Application& Allotment A/c - Dr. 40,000

Loss on issue of debenture
To 15% Debenture A/c 40,000
To Premium on redemption 4000
(Being Issue of debentures at par and redeemable
at par)
Bank A/c - Dr. 44,000
To Debenture Application&Allotment A/c 44,000
(Being application &allotment money recd.)
Debenture Application& Allotment A/c - Dr. 44,000
Loss on issue of debenture 4000
To 15% Debenture A/c 40,000
To Securities Premium A/c 4,000
Premium on redemption 4000
(Being Issue of debentures at par and redeemable
at par)

Work sheet 6

Issue of Debentures for consideration other than cashans issue of debentures as collateral
security
Time: 30 min M.M: 12

1 Give the meaning of ‘Issue of Debentures as a collateral security’. 1

Ans. It means issue of debentures to lenders as an additional security over
and above the prime security

2 Sumedha Ltd. purchased Machinery from Hira Ltd. for Rs.8,40,000 . 3

Sumedha Ltd. issued 9% Debentures of Rs.100 each at a premium of 20%.
Pass necessary journal entries in the books of Sumedha Ltd.
Journal
Date Particulars LF Dr Cr Amount
Amount

Debenture Suspense A/c - Dr. 10,00,000

To Debenture A/c 10,00,000

(Being Issue of 10,000

Debentures of Rs.100 each as
collateral security against the
bank loan of Rs.8,00,000)

3 Pass the necessary Journal entry when 10,000 debentures of Rs. 100 each are 4
issued as collateral security against a Bank loan of Rs. 8,00,000.
Journal
Date Particulars LF Dr Cr Amount
Amount

Debenture Suspense A/c - Dr. 10,00,000

To Debenture A/c 10,00,000

(Being Issue of 10,000

Debentures of Rs.100 each as
collateral security against the
bank loan of Rs.8,00,000)

4 4
X Ltd. obtained a loan of Rs. 4,00,000 from IDBI Bank. The company issued
5000, 9% Debentures of Rs. 100 each as a collateral security for the same.
Show how these items will be presented in the Balance Sheet of the
company.
Balance Sheet as at-------------------------
 Particulars Note Current Previous
No. Year Year
(Rs.) (Rs.)
Equity & Liabilities
Non- Current Liabilities
Long Term Borrowings 1 5,00,000
5,00,000

Note no. 1
Long Term Borrowings
Particulars Current Year Previous
(Rs.) Year
(Rs.)
Loan from State Bank of India 5,00,000
(Collateral Security issued 5,000
9% Debentures of Rs.100 each)
5,00,000