C Ltd. had - 5,00,000 authorized capital on 31-12-2021 divided into shares of 100 each out of which 4,000 shares were issued and fully paid up. In…

CA Intermediate · Advanced Accounting · MTP · May 2024
C Ltd. had - 5,00,000 authorized capital on 31-12-2021 divided into shares of 100 each out of which 4,000 shares were issued and fully paid up. In June 2022 the Company decided to convert the issued shares into stock. But in June, 2023 the Company re-converted the stock into shares of 10 each, fully paid up. Pass entries and show how Share Capital will appear in Notes to Balance Sheet as on 31-12-2022 and 31-12-2023.

Suggested Answer and Working Notes:

Journal Entries Particulars ₹ 2022 June Equity Share Capital A/c Dr. 4,00,000 To Equity Stock A/c 4,00,000 (Being conversion of 4,000 fully paid Equity Shares of 100into 4,00,000 Equity Stock as per resolution in general meeting dated...) 2023 June Equity Stock A/c Dr. 4,00,000 To Equity Share Capital A/c 4,00,000 (Being re-conversion of 4,00,000 Equity Stock into 40,000 shares of 10fully paid Equity Shares as per resolution in General Meeting dated...)

Topics: Accounting for Reconstruction of Companies

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