The following is the abstract of Balance Sheet Happy Ltd. as on 31 st March, 2024: Particulars ₹ Issued and paid up capital 90,000 Equity shares of…

CA Foundation · Accounting · PYQS · June 2024
The following is the abstract of Balance Sheet Happy Ltd. as on 31 st March, 2024: Particulars ₹ Issued and paid up capital 90,000 Equity shares of 10 each fully paid -up 9,00,000 Less: Calls –in–arrear (₹ 10,000 Equity shares of 2 each) 20,000 8,80,000 40,000 Equity shares of 10 each, 4 cash paid up 1,60,000 Reserves and Surplus: Capital Reserve (realized in cash) 60,000 Capital Redemption Reserve 1,60,000 Securities Premium 1,00,000 General Reserve 1,20,000 Profit and Loss Account 7,00,000 On 1 st April, 2024. The company makes final call @6 each on 40000 equity shares. The call money is duly received by 30 th April, 2024. On 1 st May, 2024 the Board of Directors of the company decided: (i) To forfeit the share on which final call of 2 each is due: (ii) To re- issue the forfeited share @11 each as fully paid up: (iii) To issue fully paid bonus shares in the ratio of one fully paid bonus share for every two fully paid shares held; and (iv) To use minimum balance of Profit and Loss Account. Pass necessary journal entries in the books of the company on the basis of the above decisions.

Suggested Answer and Working Notes:

Journal Entries in the books of Happy Ltd. Date Particulars Debit ₹ Credit ₹ 1-4-2024 Equity share final call A/c Dr. 2,40,000 To Equity share capital A/c 2,40,000 (Being final calls of 6per share on 40,000 equity shares due as per Board’s Resolution dated….) 30-4-2024 Bank A/c Dr. 2,40,000 To Equity share final call A/c 2,40,000 (Being final call money on 40,000 equity shares received) 1-5-2024 Equity Share Capital Account Dr. 1,00,000 To Calls-in-Arrears A/c 20,000 To Forfeited Shares A/c 80,000 (Bring forfeiture of10,000 Shares due to Non- Payment of Final Call of2per share) 1-5-2024 Bank A/c Dr. 1,10,000 To Securities Premium A/c 10,000 To Equity Share Capital A/c 1,00,000 (Being re -issue of10,000 forfeited shares at 11 each) Forfeited Shares A/c Dr. 80,000 To Capital Reserve A/c 80,000 (Being the profit on re -issue transferred to Capital Reserve) 1-5-2024 Capital Reserve Dr. 1,40,000 Securities Premium A/c Dr. 1,10,000 Capital Redemption Reserve A/c Dr. 1,60,000 General Reserve A/c Dr. 1,20,000 Profit and Loss A/c (b.f.) Dr. 1,20,000 To Bonus to shareholders A/c 6,50,000 (Being making provision for bonus issue of one share for every two shares held) 1-5-2024 Bonus to shareholders A/c Dr. 6,50,000 To Equity share capital A/c 6,50,000 (Being issue of bonus shares @10 per share) Working Notes: 1. Number of Bonus shares to be issued - (₹ 1,30,000 shares /2) X 1 = 65,000 shares 2. The authorised capital should be increased as per details given below: Particulars ₹ Existing issued Equity share capital (₹ 9,00,000 +4,00,000) 13,00,000 Add: Issue of bonus shares to equity shareholders 6,50,000 Total 19,50,000

Topics: Issue, Forfeiture and Re-issue of Shares

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