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CL CH2

Alex Ltd. forfeited shares due to unpaid allotment and call money, later reissuing them at a discount. A limited company invited applications for shares, faced forfeitures for unpaid calls, and sold forfeited shares to another party. Chandu Ltd. is redeeming preference shares with various reserves and call-in-arrears, requiring journal entries for the redemption process.

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73 views2 pages

CL CH2

Alex Ltd. forfeited shares due to unpaid allotment and call money, later reissuing them at a discount. A limited company invited applications for shares, faced forfeitures for unpaid calls, and sold forfeited shares to another party. Chandu Ltd. is redeeming preference shares with various reserves and call-in-arrears, requiring journal entries for the redemption process.

Uploaded by

hhimanshsoni
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

1] Alex Ltd.

forfeited 100 shares of ₹10 each issued at a premium of 20% (to be paid at the time of
application money) on which allotment money of *4 and first call money of ₹3 were not received;
the final call money of ₹2 is not yet called.

These shares were originally allotted in the ratio of 4:5. The shares were subsequently re-issued at a
discount of 1 per share, credited as 18 paid-up.

Pass journal entries in the books of Alex Ltd.

(3 marks)

2] A limited Issued a prospectus inviting applications for 2,000 equity shares of ₹10 each at a
premium of ₹2 per share payable as follows:

On application ₹2

On allotment ₹5 (Including premium)

On first call ₹3

On second and final call ₹2

Applications were received for 45,000 shares and pro-rata allotment was made on the applications
for 36,000 shares. Money overpaid on applications was employed on account of suin due on
allotment.

Ramesh, to who 600 shares were allotted, failed to pay the allotment money and on his subsequent
failure to pay the first call, his shares were forfeited. Mohan, the holder of 900 shares, failed to pay
the two calls, and his shares were forfeited after the second call.

Of the shares forfeited, 1,200 shares were sold to Krishna credited as fully paid @ 9 per share, the
whole of Ramesh's shares being included. Pass the necessary journal entries and prepare the cash
book entries and prepare balance sheet.

(12 marks)

3] Chandu Ltd. has issued 1,00,000 redeemable preference shares of 100 each, on which full amount
was called, are due for redemption at a premium of 20%. The following balances are appearing in the
books of the company:

9% Redeemable Preference Shares of ₹100 each 1,00,00,000

Call-in-Arrears (on above Preference Shares) 2,00,000

General Reserve 60,00,000

Securities Premium 18,00,000

Development Rebate Reserve 40,00,000

It is ascertained that call-in-arrears are on account of final call on 10,000 shares held by four
members whose where about not be known. ₹10,00,000 of the Development Rebate Reserve is free
for distribution as dividend. Balance of General Reserve and Securities Premium are to be utilized for
the purpose of redemption of and shortfall, if any, is to be made good by issue of equity shares of 10
each at a premium of 25%. The redemption of preference shares was duly carried out. You are
required to give the necessary entries in the books of the company.

(5 marks)

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