Following notes pertain to the Balance Sheet of PQR Company Limited as at 31 st March, 2024: ₹ in lakhs Authorized capital: 5,00,000 shares of 100…

CA Foundation · Accounting · PYQS · May 2025
Following notes pertain to the Balance Sheet of PQR Company Limited as at 31 st March, 2024: ₹ in lakhs Authorized capital: 5,00,000 shares of 100 each - 500 500 Issued and Subscribed capital: 1,50,000 Equity Shares of 100 each, 70 paid up - 105 10,000 11% Preference Shares of 100 each fully paid - 10 115 Reserves and Surplus: Revaluation Reserve - 5.20 General Reserve - 25 Capital Redemption Reserve - 25 Securities premium (collected in cash)₹ 30 Profit and Loss Account (Cr. Balance)₹ 20 On 30 th April, 2024, the Company has made final call@30 each on 1,50,000 equity shares. The call money was received by 31 st May, 2024. Thereafter, on 1 st July, 2024 the company decided to issue bonus shares at the rate of3equity shares for every5equity shares held by way of capitalising its reserves, it decided that there should be minimum usage of balance in Profit & Loss A/c. On 1 st October, 2024, the Company issued right shares at the rate of one equity share for every five shares held on that date at a premium of 10%. All the rights shares were accepted by the existing shareholders and the money was duly received by 31 st October, 2024. Show necessary journal entries in the books of the company for bonus issue and rights issue. Also prepare notes on Share Capital & Reserve & Surplus relevant to the Balance Sheet of the company after the issue of bonus shares & rights share.

Suggested Answer and Working Notes:

In the books of PQR Company Journal Entries Date ₹ Dr. (₹) Cr. (₹) 2024 April, 30 Equity Share Final Call A/c Dr. 45,00,000 To Equity Share Capital A/c 45,00,000 (Final call of 30per share on 1,50,000 equity shares made due) May, 31 Bank A/c Dr. 45,00,000 To Equity Share Final Call A/c 45,00,000 (Final call money on equity shares received) July, 1 Capital Redemption Reserve A/c Dr. 25,00,000 Securities Premium A/c Dr. 30,00,000 General Reserve A/c Dr. 25,00,000 Profit and Loss A/c (b.f.) Dr. 10,00,000 To Bonus to Shareholders A/c 90,00,000 (Bonus issue of3 shares for every5 shares held, by utilising various reserves as per Board’s resolution dated…….) Bonus to Shareholders A/c Dr. 90,00,000 To Equity Share Capital A/c 90,00,000 (Capitalisation of profit) Oct.31 Bank A/c Dr. 52,80,000 To Securities Premium A/c 4,80,000 To Equity Share Capital A/c 48,00,000 (Being Rights issue of1 shares for every5 shares held as per board resolution dated ………..) Notes to Balance Sheet as at 31 st October, 2024 (after bonus issue) (₹ in Lakhs) Authorised Capital 5,00,000 shares of 100each - 500 500 Issued and subscribed capital 10,00011% Preference shares of 100each, fully paid - 10 2,88,000 Equity shares of 100each, fully paid - 288 298 (Out of the above,90,000 equity shares @10 each were issued by way of bonus shares and - 48,000 shares issued at 110 per share) Revaluation Reserve - 5.20 Capital Redemption Reserve 25 Less: Utilised for bonus issue (25) NIL Securities premium 30 Less: Utilised for bonus issue (30) Add: Received from Bonus issued 4.8 4.8 General Reserve 25 Less: Utilised for bonus issue (25) NIL Profit and Loss Account 20 Less: Utilised for bonus issue. (10) Closing Balance 10 Working Note: 1. Number of bonus shares to be issued -15,00,000X 3/5= 90,000 shares 2. The Issued and subscribed and paid-up capital should be increased as per details given below: ₹ Existing issued Equity share capital 1,50,00,000 Add: Issue of bonus shares to equity shareholders 90,00,000 Add: Issue of right share to Equity Shareholders 48,00,000 2,88,00,000

Topics: Accounting for Bonus Issue and Right Issue

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