1.
marks questions : (10 marks )
What is the use of securities premium reserve ?
What is minimum subscription ?
What is meant by private placement of shares ?
What is the difference between calls in arrears and calls in advance?
What is the purpose of creating debenture redemption reserve?
Name two sources of finance of redemption of debentures ?
When is the balance of debenture redemption reserve transferred to
general reserve ?
Give names of specified securities for DRI ?
What is meant by collateral security ?
10 what do mean by forfeiture of shares ?
[Link] 1-4-2015 V.V.L. Ltd issued 1000, 9% debentures of Rs 100 each at a
discount of 6%, redeemable at a premium of 10% after three years. Pass
necessary journal entries for the issue of debentures and debentures
interest for the year ended 31-3-2016, assuming that interest is payable on
30 th September and 31 st March and the rate of tax deducted at source is
10%. The company closes its books on 31 st March every year.( 4 marks)
[Link] Limited issued 40,000 Equity Shares of Rs.10 each at a premium of
Rs.2.50 per share. The amount was payable as follows:
On Application ……………………… Rs.2 per share
On Allotment ………………………. Rs.4.50 per share (including premium)
And on Call …………………………...Rs.6 per share
Allotment was made to the applicants as follows:
(i) Applicants for 20,000 shares were allotted 10,000 shares
(ii) Applicants for 56,000 shares were allotted 14,000 shares
(iii) Applicants for 48,000 shares were allotted 16,000 shares
It was decided that excess amount received on applications would be
utilised on allotment and the surplus would be refunded.
Ram, to whom 1,000 shares were allotted, who belongs to category (i),
failed to pay allotment money. His shares were forfeited after the call.
Pass necessary journal entries in the books of Vinod Limited for the above
transactions.
(8 marks)
4.(Debentures issued as collateral security) A company had Rs. 5, 00,000
6% debentures outstanding on 1st January, 2011. During the year company
took a loan of Rs. 1, 00,000 from bank for which the company placed with
bank, debentures for Rs.1,20,000 as collateral security. Show the
treatment in the books for debenture Collateral Security.( 4 marks )
X Company bought the following assets and issued debentures.
Plant Rs. 1,00,000; Debentures of Rs. 100 each issued at par.
Plant Rs. 81,000; Debentures of Rs. 100 each issued at 10% discount.
Plant Rs. 63,000; Debentures of Rs. 100 each issued at 5% premium.
Pass journal entries and Find out number of debentures to be issued ( 4
marks)
[Link] the following transactions for purchase and immediate
cancellation of own debentures on the assumption D.R.R. has already been
created.
Rs.4,00,000, 10% Debentures of Rs. 100 each purchased from open market
at par value for immediate cancellation.
Rs. 2,50,000, 10% Debentures of Rs. 100 each purchased at Rs. 96 for
immediate cancellation.
350 10% Debentures of Rs. 100 redeemable at Rs. 110 were cancelled by
purchase of debentures in the open market at Rs. 104. ( 6 marks )
6. Bharat Limited was registered with a Nominal Capital of Rs. 5,00,000 in
shares of Rs. 100 each 3 000 of which were issued for subscription, payable
as to Rs. 12.50 on application Rs. 12.50 on allotment and Rs. 25 three
months after the allotment and the balance to be called up as and when
required.
All moneys up to allotment were duly received, but as regards the call of Rs
25, a shareholder holding 100 shares did not pay the amount due. Another
shareholder who was allotted 150 shares paid the entire amount of the
shares.
Show the necessary journal entries to record the above transactions
(including cash) and show how these appear in Balance Sheet.
(6 marks)
7. A company issued debentures of the par value of Rs. 1, 00,000 at a
discount of 6%. The debentures were repayable by annual drawings of Rs.
20,000. How would you deal with the discount on debentures? Show
discount account in the company’s ledger for the period of duration of
debentures. ( 4 marks )
8. samparg Ltd has an authorized capital of Rs. 20,00,000 divided into
equity shares of Rs 10 each . The company invited applications for issuing
60,000 shares .Applications for 58000 were received.
All calls were made and were duly received except the final call of Rs. 3 per
share .These shares were forfeited.
Show the above information in companies balance sheet along with notes
to accounts. ( 4 marks )