The following notes pertain to Snowberry Ltd.'s Balance Sheet as on 31st March, 2024: Notes ₹ in Lakhs (1) Share Capital Authorised : 20 crore…

CA Foundation · Accounting · MTP · September 2024
The following notes pertain to Snowberry Ltd.'s Balance Sheet as on 31st March, 2024: Notes ₹ in Lakhs (1) Share Capital Authorised : 20 crore shares of 10 each 20,000 Issued and Subscribed: 10 crore Equity Shares of 10 each 10,000 2 crore11% Cumulative Preference Shares of 10 each 2,000 Total 12,000 Called and paid up: 10 crore Equity Shares of 10 each, 8 per share called and paid up 8,000 2 crore11% Cumulative Preference Shares of 10 each, fully called and paid up 2,000 Total 10,000 (2) Reserves and Surplus : Capital Reserve (profit on fixed assets realized in cash) 485 Capital Redemption Reserve 1,000 Securities Premium 2,000 General Reserve 1,040 Surplus i.e. credit balance of Profit & Loss Account 273 Total 4,798 On 2nd April, 2024, the company made the final call on equity shares @2 per share. The entire money was received in the month of April, 2024. On 1st June, 2024, the company decided to issue to equity shareholders bonus shares at the rate of 2 shares for every 5 shares held and for this purpose, it decided to utilize the capital reserves to the maximum possible extent. Pass journal entries for all the above mentioned transactions. Also prepare the notes on Share Capital and Reserves and Surplus relevant to the Balance Sheet of the company immediately after the issue of bonus shares.

Suggested Answer and Working Notes:

Journal Entries in the books of Snowberry Ltd. 2024 Particulars Dr. ₹ in lakhs Cr. ₹ in lakhs April, 2 Equity Share Final Call A/c Dr. 2,000 To Equity Share Capital A/c 2,000 (Final call of 2per share on 10 crore equity shares made due) Bank A/c Dr. 2,000 To Equity Share Final Call A/c 2,000 (Final call money on 10 crore equity shares received) June, 1 Capital Redemption Reserve A/c Dr. 1,000 Securities Premium A/c Dr. 2,000 Capital Reserve A/c Dr. 485 General Reserve A/c Dr. 515 To Bonus to Shareholders A/c 4,000 (Bonus issue of two shares for every five shares held, by utilising various reserves as per Board’s resolution dated…….) Bonus to Shareholders A/c Dr. 4,000 To Equity Share Capital A/c 4,000 (Capitalisation of profit) Notes to Accounts Particulars ₹ in lakhs 1. Share Capital Authorised share capital 20 crore shares of 10each 20,000 Issued, subscribed and fully paid up share capital 14 crore Equity shares of 10each, fully paid up 14,000 (Out of the above,4 crore equity shares @10 each were issued by way of bonus) 2 crore,11% Cumulative Preference share capital of 10each, fully paid up 2,000 16,000 2. Reserves and Surplus Capital Reserves 485 Less: Utilized for bonus issue (485) - Capital Redemption reserve 1,000 Less: Utilized for bonus issue (1, 000) - Securities Premium 2,000 Less: Utilized for bonus issue (2, 000) - General Reserve 1,040 Less: Utilized for bonus issue (515) 525 Surplus (Profit and Loss Account) 273 Total 798

Topics: Accounting for Bonus Issue and Right Issue

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