NIOS Class 12 Accountancy Chapter 27 Issue of Shares Solutions English Medium As Per New Syllabus. to each chapter is provided in the list so that you can easily browse throughout different chapters NIOS Class 12 Accountancy Chapter 27 Issue of Shares Notes and select need one. NIOS Class 12 Accountancy Chapter 27 Issue of Shares Question Answers Download PDF. NIOS Study Material of Class 12 Accountancy Paper Code: 320.
NIOS Class 12 Accountancy Chapter 27 Issue of Shares
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Issue of Shares
Chapter: 27
| Module – 5: Company Accounts |
INTEXT QUESTIONS 27.1
Fill in the blanks with appropriate word/words :
(i) Face value of share is __________ value of the share.
Ans: Denominated.
(ii) Shares in consideration other than cash are issued to _________.
Ans: Vendors.
(iii) Share money on issued shares can be demanded by the company in lump sum or in __________.
Ans: Instalments.
(iv) Share application money is received by the company from share _________.
Ans: Applicants.
INTEXT QUESTIONS 27.2
Fill in the blanks with appropriate word or words in the following sentences:
(i) When company receives applications for more number of shares than offered for subscription it is a case of ________.
Ans: Over subscription.
(ii) When share money is to be received in two or more instalments the first instalment is called ________.
Ans: Share application.
(iii) Call is a demand made by the company asking the shareholders to pay the _________ amount.
Ans: Called up.
(iv) A company _________ allot more shares than it has issued.
Ans: Cannot.
INTEXT QUESTIONS 27.3
Fill in the blanks with suitable word/words and figure/figures :
(i) Securities premium is a _________ to the company.
Ans: Gain.
(ii) If allotment money demanded is Rs. 5 per share including Rs. 2 for premium. The share capital account will be credited by Rs. _________.
Ans: Rs.3.
(iii) A company issues its shares of Rs. 50 each at Rs. 60 per share. The excess money of Rs. 10 each is _________.
Ans: Securities premium.
(iv) If the premium per share is Rs. 20 on a share of Rs. 100 each, the share capital A/c will be credited with ________ per share.
Ans: Rs.100 per share.
INTEXT QUESTIONS 27.4
Fill in the blanks with suitable word/words :
(i) Discount on issue of shares is a _________ to the company.
Ans: Loss.
(ii) A company issues its shares of Rs.100 each at a discount of 10%, money
receivable on each share is __________.
Ans: Rs.90.
(iii) If discount per share is Rs. 5 on shares of Rs. 100 each, the share capital A/c will be credited with Rs. __________.
Ans: Rs.100 per share.
INTEXT QUESTIONS 27.5
Fill in the blanks with suitable word/words and figure/figures:
(i) The call money demanded by the company if not paid by a shareholder, will be debited to ________ A/c.
Ans: Calls in arrears.
(ii) A shareholder pays Rs. 6 per share on allotment which includes Rs. 2 per share for the next call, extra amount paid is __________ .
Ans: Calls in advance.
(iii) Interest charged by the company on the amount of calls-in-arrears will be credited to __________ .
Ans: Interest on calls in arrears A/c.
(iv) Interest allowed on the call paid in advance will be debited to ________.
Ans: Interest on calls in advance A/c.
| TERMINAL EXERCISE |
1. What is meant by over subscription of shares? What accounting treatment is given to the amount over subscribed?
Ans: Over subscription of shares means a situation where a company receives applications for more number of shares than the number of shares offered to the public for subscription. In such a case, the company cannot allot more shares than it has issued.
In case of over subscription, the company may adopt the following accounting treatment:
(i) Rejection of excess applications and refund of money: The company may reject some applications and return the application money to those applicants. The entry is:
Share Application A/c Dr.
To Bank A/c.
(ii) Adjustment of excess application money: The excess application money received from applicants may be adjusted towards the amount due on allotment. The entry is:
Share Application A/c Dr.
To Share Allotment A/c.
(iii) Calls-in-Advance: If authorised, the excess money may be retained as calls-in-advance to be adjusted against future calls.
The entry is:
Share Application A/c Dr.
To Calls-in-Advance A/c.
2. What is meant by ‘Shares Issued at Premium? State the purposes for which Premium amount can be utilised.
Ans: When a company issues its shares at a price higher than its face value, the shares are said to be issued at premium. The difference between the issue price and the face value is called premium. This amount is credited to Securities Premium Account and is considered a capital gain for the company.
According to the Companies Act, the amount of premium can be utilised for the following purposes:
(i) For issuing fully paid bonus shares.
(ii) For writing off preliminary expenses, discount on issue of shares and debentures, underwriting commission or expenses on issue.
(iii) For paying premium on redemption of preference shares or debentures.
(iv) For buy back of shares.
3. What is meant by issue of shares at discount? State the conditions to be fulfilled for the issue of shares at discount under the Companies Act.
Ans: When a company issues its shares at a price lower than its face value, the shares are said to be issued at discount. The difference between the face value and issue price is called discount. Discount on issue of shares is treated as a loss to the company.
The Companies Act has laid down the following conditions for issuing shares at discount:
(i) At least one year must have elapsed since the company commenced business.
(ii) The shares must be of a class already issued.
(iii) The issue must be authorised by passing a resolution in the general meeting and approved by the court.
(iv) The rate of discount should not exceed 10% of the face value unless special permission is obtained from the Central Government.
4. Explain in brief the terms:
(i) Calls-in Arrears.
Ans: Calls-in-arrears refers to the amount of allotment or call money which has been demanded by the company but has not been paid by the shareholders within the specified time. Such unpaid amount is treated as arrears and is transferred to Calls-in-Arrears Account. The company is authorised to charge interest on such arrears for the period of delay.
(ii) Calls-in Advance
Ans: Calls-in-advance refers to the amount received by the company from shareholders in advance before it is actually called. This amount is credited to Calls-in-Advance Account and is shown as a liability in the Balance Sheet until it is adjusted. The company may pay interest on such advance amount as per the prescribed rate.
5. Make journal entries:
(a) XY Limited whose share capital is divided into 20,000 equity shares of ` 10 each, issued 6,000 shares to the public. The entire money is payable along with the application. All the shares were subscribed and application money was received.
Ans: Calculation:
Shares issued = 6,000
Face value = ₹10
Total = 6,000 × 10 = ₹60,000
Journal Entries
1. Receipt of Application Money:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 60,000 | |
| To Share Application A/c | 60,000 |
2. Transfer to Share Capital:
| Particulars | Dr (₹) | Cr (₹) |
| Share Application A/c | 60,000 | |
| To Share Capital A/c | 60,000 |
(b) A Limited issued 10,000 equity shares of Rs. 100 each, payable Rs. 25 per share on application, Rs. 25 per share on allotment, and Rs. 25 on each of the two subsequent calls. All the money was duly received.
Ans: Calculation
Shares = 10,000 × ₹100 = ₹10,00,000
Application = ₹25 = ₹2,50,000
Allotment = ₹25 = ₹2,50,000
First Call = ₹25 = ₹2,50,000
Second Call = ₹25 = ₹2,50,000
Journal Entries
1. Application Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 2,50,000 | |
| To Share Capital A/c | 2,50,000 |
2. Allotment Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 2,50,000 | |
| To Share Capital A/c | 2,50,000 |
3. First Call Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 2,50,000 | |
| To Share Capital A/c | 2,50,000 |
4. Second Call Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 2,50,000 | |
| To Share Capital A/c | 2,50,000 |
(c) X Ltd., issued 10,000 shares of Rs. 10 each at Rs. 15 payable Rs. 3 on application, Rs. 8 on allotment (including the premium of Rs. 5) and Rs. 4 on call. All the shares are subscribed, allotted and paid for at due dates.
Ans: Calculation:
Shares = 10,000 × ₹10 = ₹1,00,000
Premium = ₹5 × 10,000 = ₹50,000
Journal Entries
1. Application Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 30,000 | |
| To Share Capital A/c | 30,000 |
2. Allotment Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 80,000 | |
| To Share Capital A/c | 30,000 | |
| To Securities Premium A/c | 50,000 |
3. Call Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 40,000 | |
| To Share Capital A/c | 40,000 |
(d) A limited issued 10,000 shares of Rs. 20 each at a discount of 10%. The shares were payable as Rs.4 per share on application, Rs. 8 per share on allotment and the balance on first call. All the money was duly received.
Ans: Calculation
Shares = 10,000 × ₹20 = ₹2,00,000
Discount = 10% = ₹20,000
Journal Entries:
Application Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 40,000 | |
| To Share Capital A/c | 40,000 |
2. Allotment Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 80,000 | |
| To Share Capital A/c | 80,000 |
3. Call Due & Received:
| Particulars | Dr (₹) | Cr (₹) |
| Bank A/c | 60,000 | |
| Discount on Issue of Shares A/c | 20,000 | |
| To Share Capital A/c | 80,000 |
6. (a) Akshay Ltd. made an issue of 20,000 shares of Rs.10 each payable as follows : Rs. 2 on application, Rs. 2 on allotment, Rs. 3 on first call and the balance on second call. The first call is made and all members pay, including a member holding 800 shares, who pays for the balance due in full. Later the final call is made and is fully met.
Give journal entries:.
Ans:
Journal Entries in the Books of Akshay Ltd.
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| Bank A/c Dr | 40,000 | |||
| To Share Application A/c | 40,000 | |||
| (Application money received) | ||||
| Share Application A/c Dr | 40,000 | |||
| To Share Capital A/c | 40,000 | |||
| (Application money transferred) | ||||
| Share Allotment A/c Dr | 40,000 | |||
| To Share Capital A/c | 40,000 | |||
| (Allotment money due) | ||||
| Bank A/c Dr | 40,000 | |||
| To Share Allotment A/c | 40,000 | |||
| (Allotment money received) | ||||
| Share First Call A/c Dr | 60,000 | |||
| To Share Capital A/c | 60,000 | |||
| (First call money due) | ||||
| Bank A/c Dr | 62,400 | |||
| To Share First Call A/c | 60,000 | |||
| To Calls in Advance A/c | 2,400 | |||
| (First call received including advance) | ||||
| Share Second & Final Call A/c Dr | 60,000 | |||
| To Share Capital A/c | 60,000 | |||
| (Second & final call due) | ||||
| Calls in Advance A/c Dr | 2,400 | |||
| To Share Second & Final Call A/c | 2,400 | |||
| (Advance adjusted) | ||||
| Bank A/c Dr | 57,600 | |||
| To Share Second & Final Call A/c | 57,600 | |||
| (Final call money received) |
(b) Nirmal Ltd. with an authorised capital of Rs. 10,00,000, in shares of Rs. 10 each, issued 50,000 of such shares, payable Rs. 2 per share on application, Rs. 3 on allotment, Rs. 2.50 per share three months later, and duly received. But when the call of Rs. 2.50 was made a shareholder holding 200 share failed to pay the call money while another shareholder holding 400 shares paid the entire Balance. Give journal entries.
Ans: Journal Entries in the Books of Nirmal Ltd.
Working Note:
- Shares issued = 50,000
- Face value = Rs. 10 per share
| Particulars | Amount per Share | Total (₹) |
| Application | ₹2.00 | 1,00,000 |
| Allotment | ₹3.00 | 1,50,000 |
| First Call | ₹2.50 | 1,25,000 |
| Final Call | ₹2.50 | 1,25,000 |
On Final Call:
- 200 shares unpaid → 200 × 2.50 = 500 (Calls in Arrears)
- 400 shares paid full balance in advance → 400 × 2.50 = 1,000 (Calls in Advance)
Journal Entries:
| Particulars | Debit (₹) | Credit (₹) |
| Bank A/c Dr. | 1,00,000 | |
| To Share Application A/c | 1,00,000 | |
| (Being application money received.) | ||
| Share Application A/c Dr. | 1,00,000 | |
| To Share Capital A/c | 1,00,000 | |
| (Being application money transferred to Share Capital.) | ||
| Share Allotment A/c Dr. | 1,50,000 | |
| To Share Capital A/c | 1,50,000 | |
| (Being allotment money due.) | ||
| Bank A/c Dr. | 1,50,000 | |
| To Share Allotment A/c | 1,50,000 | |
| (Being allotment money received.) | ||
| Share First Call A/c Dr. | 1,25,000 | |
| To Share Capital A/c | 1,25,000 | |
| (Being first call money due.) | ||
| Bank A/c Dr. | 1,26,000 | |
| To Share First Call A/c | 1,25,000 | |
| To Calls in Advance A/c | 1,000 | |
| (Being first call money received and final call money on 400 shares received in advance.) | ||
| Share Final Call A/c Dr. | 1,25,000 | |
| To Share Capital A/c | 1,25,000 | |
| (Being final call money due.) | ||
| Calls in Advance A/c Dr. | 1,000 | |
| Calls in Arrears A/c Dr. | 500 | |
| Bank A/c Dr. | 1,23,500 | |
| To Share Final Call A/c | 1,25,000 | |
| (Being final call money received after adjusting calls in advance and calls in arrears.) |
7. Goodluck Ltd. issued 50,000 shares of Rs. 10 each at a Premium of Rs.4 per share payable as :
On Application Rs. 2 per share
On Allotment Rs. 6 per Share (including Premium Rs.3)
On first and final Call Rs. 6 per share (including Premium Rs. 1)
Over payment on applications were to be applied towards sums due on allotment only. Applications were received for 75,000 shares. Applicants for 15,000 shares were sent letters of regret and money returned to them in full. Applicants for 15,000 shares were allotted only 5,000 shares. All money due on Allotment and call was duly received.
Make journal entries:
Ans: Journal Entries in the Books of Goodluck Ltd.
Working Notes:
- Shares Issued = 50,000
- Face Value = Rs.10
- Premium = Rs.4
- Issue Price = Rs.14 per share
Applications Received
Applied for = 75,000 shares
Rejected = 15,000 shares
Partial Allotment = 15,000 applied, 5,000 allotted
Fully Allotted = 45,000 shares
Application Money
Application Money Received
= 75,000 × ₹2
= ₹1,50,000
Refund
= 15,000 × ₹2
= ₹30,000
Excess Application Money Adjusted
= 10,000 × ₹2
= ₹20,000
Application Money Transferred
= 50,000 × ₹2
= ₹1,00,000
Journal Entries (Table Format)
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| Bank A/c Dr. | 1,50,000 | |||
| To Share Application A/c | 1,50,000 | |||
| (Being application money received on 75,000 shares @ ₹2 per share.) | ||||
| Share Application A/c Dr. | 1,50,000 | |||
| To Share Capital A/c | 1,00,000 | |||
| To Share Allotment A/c | 20,000 | |||
| To Bank A/c | 30,000 | |||
| (Being application money adjusted, excess transferred to allotment and balance refunded.) | ||||
| Share Allotment A/c Dr. | 3,00,000 | |||
| To Share Capital A/c | 1,50,000 | |||
| To Securities Premium A/c | 1,50,000 | |||
| (Being allotment money due including securities premium.) | ||||
| Bank A/c Dr. | 2,80,000 | |||
| To Share Allotment A/c | 2,80,000 | |||
| (Being allotment money received after adjustment of excess application money.) | ||||
| Share First & Final Call A/c Dr. | 3,00,000 | |||
| To Share Capital A/c | 2,50,000 | |||
| To Securities Premium A/c | 50,000 | |||
| (Being first and final call money due including securities premium.) | ||||
| Bank A/c Dr. | 3,00,000 | |||
| To Share First & Final Call A/c | 3,00,000 | |||
| (Being first and final call money received.) |
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