Blossom Ltd. (unlisted company other than AIFI, Banking company, NBFC and HFC) provides the following information as at 31st March, 2026:…

CA Foundation · Accounting · MTP · September 2026
Blossom Ltd. (unlisted company other than AIFI, Banking company, NBFC and HFC) provides the following information as at 31st March, 2026: Particulars ₹ Shareholder's Funds (a) Share Capital Authorized Share Capital: 90,000 equity shares of ₹ 10 each fully paid 9,00,000 Issued and subscribed share capital: 60,000 equity shares of ₹ 10 each fully paid 6,00,000 (b) Reserves and Surplus Profit & Loss Account 3,24,000 Debenture Redemption Reserve 36,000 Non-current liabilities (a) Long term borrowings 12% Debentures 3,60,000 Current Liabilities (a) Trade payables 3,45,000 Non-current assets (a) Property, Plant and Equipment (Freehold property) 3,45,000 (b) Non-current Investment: DRR Investment 54,000 Current assets (a) Inventories 4,05,000 (b) Trade receivables 2,25,000 (c) Cash and bank balances: Cash at bank 5,46,000 Cash in hand 90,000 At the Annual General Meeting on 1.4.2026, it was resolved: (a) To give existing shareholders the option to purchase one ₹ 10 share at ₹ 15 for every four shares (held prior to the bonus distribution). This option was taken up by all the shareholders. (b) To issue one bonus share for every five shares held. (c) To repay the debentures at a premium of 3%. The DRR Investments realised at par as per existing Book value. Give the necessary journal entries for these transactions.

Suggested Answer and Working Notes:

Journal Entries in the Books of Blossom Ltd. Dr. ₹ Cr. ₹ Bank A/c Dr. 2,25,000 To Equity Shareholders A/c 2,25,000 (Application money received on 15000 shares @ ₹ 15 per share to be issued as rights shares in the ratio of 1:4) Equity Shareholders A/c Dr. 2,25,000 To Equity Share Capital A/c 1,50,000 To Securities Premium A/c 75,000 (Share application money on 15,000 shares @ ₹ 10 per share transferred to Share Capital Account, and ₹ 5 per share to Securities Premium Account vide Board's Resolution dated...) Securities Premium A/c Dr. 75,000 Profit & Loss A/c Dr. 75,000 To Bonus to Shareholders A/c 1,50,000 (Amount transferred for issue of bonus shares to existing shareholders in the ratio of 1:5 vide General Body's resolution dated...) Bonus to Shareholders A/c Dr. 1,50,000 To Equity Share Capital A/c 1,50,000 (Issue of bonus shares in the ratio of 1 for 5 vide Board's resolution dated....) 12% Debentures A/c Dr. 3,60,000 Premium Payable on Redemption A/c Dr. 10,800 To Debenture holders A/c 3,70,800 (Amount payable to debentures holders) Profit and loss A/c Dr. 10,800 To Premium Payable on Redemption A/c 10,800 (Premium payable on redemption of debentures charged to Profit & Loss A/c) Debenture Redemption Reserve A/c Dr. 36,000 To General Reserve 36,000 (For DRR transferred to general reserve) Bank A/c Dr. 54,000 To Debenture Redemption Reserve Investment 54,000 (for DRR Investment realised)

Topics: Accounting for Bonus Issue and Right Issue

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