Worksheet For Issue of Share and Debenture
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Laxmi Kant SahaniWorksheet For Issue of Share and Debenture
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Laxmi Kant SahaniAccountancy Worksheet-1
M.M. 30 Topic- Issue of Share and Debenture Time: 1 Hour
1. Nominal share capital is:
(A) That part of authorised capital which is issued by the company.
(B) The amount of capital which is actually applied by prospective shareholders.
(C) The amount of capital which is paid by the shareholders.
(D) The maximum amount of share capital that a company is authorised to issue.
2. Pragya Ltd. forfeited 8,000 equity shares of ₹ 100 each issued at a premium of 10% for non-payment of first and
final call of ₹ 30 per share. The maximum amount of discount at which these shares can be reissued will be:
(A) ₹ 80,000
(B) ₹ 3,20,000
(C) ₹ 5,60,000
(D) ₹ 2,40,000
3. What is meant by ‘Issue of Debentures as a Collateral Security’
4. Utsav Ltd. decided to redeem its 4,000, 9% Debentures of ₹ 100 each which were issued at a discount of 8%, and
were redeemable at a premium of 10%. The amount transferred to Debenture Redemption Reserve will be:
(A) ₹ 4,00,000
(B) ₹ 2,00,000
(C) ₹ 1,10,000
(D) ₹ 1,00,000
5. ‘Interest paid on debentures is a charge against the profits of the company.’ Is this statement correct? Give reason
in support of your answer.
6. The directors of Axim Ltd. forfeited 20,000 equity shares of ₹ 10 each, ₹ 8 per share called up for non-payment of
first call of ₹ 2 per share. Final call of ₹ 2 per share has not been yet called. Half of the forfeited shares were reissued
as fully paid up for ₹ 15 per share. The amount transferred to Capital Reserve will be:
(A) ₹ 2,00,000
(B) ₹ 1,20,000
(C) ₹ 60,000
(D) ₹ 40,000
7. (i) Kati Ltd. issued 8,000, 9% debentures of ₹ 100 each at a discount of 10%. The full amount was payable on
application. Applications were received for 9,000 debentures and allotment was made on pro-rata basis.
Pass the necessary journal entries for the above transactions in the books of Kati Ltd.
(ii) Pivot Ltd. issued 40,000, 11% debentures of ₹ 100 each on 1st April, 2015. Half of the debentures were due for
redemption on 31st March, 2019. The company decided to transfer the minimum required amount to Debenture
Redemption Reserve on 31st March, 2018 and invested the necessary amount in Debenture Redemption Investments
on 30th April, 2018.
Pass the necessary journal entries for Redemption of Debentures.
8. (i) Rama Ltd. took over the following assets and liabilities of Krishna Ltd. on 1st April, 2019:
Land and Building ₹ 50,00,000
Furniture ₹ 10,00,000
Stock ₹ 5,00,000
Creditors ₹ 7,00,000
The purchase consideration of ₹ 60,00,000 was paid by issuing 12% debentures of ₹ 100 each at a premium of 20%.
Pass the necessary journal entries for the above in the books of Rama Ltd.
(ii) On 1st April, 2018, Sakshi Ltd. issued 1,000, 11% Debentures of ₹ 100 each at a discount of 6%, redeemable at a
premium of 5% after three years.
Pass the necessary journal entries for the issue of debentures in the books of Sakshi Ltd.
(iii) On 1st April, 2016, Canara Bank issued 5,000, 9% debentures of ₹ 100 each at a premium of 6%, redeemable on
31st March, 2019, at a premium of 10%. The issue was fully subscribed.
Pass the necessary journal entries for redemption of debentures in the books of Canara Bank.
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9. V.D. Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 6 per share. The
amount per share was payable as follows:
On application – ₹ 3 (including premium ₹ 1)
On allotment – ₹ 7 (including premium ₹ 5)
On first and final call – Balance amount
Applications were received for 2,50,000 shares. Applicants for 10,000 shares were sent letters of regret and
application money returned to them. Shares were allotted to the remaining applicants on a pro-rata basis. Money
overpaid on application was adjusted towards the sums due on allotment.
The company received all the money due on allotment except from Agam, who was allotted 1,000 shares. Her shares
were forfeited immediately after allotment. Afterwards, the first and final call was made. Seema, the holder of 2,000
shares, did not pay the first and final call on her shares. Her shares were also forfeited. 50% of the forfeited shares,
each of Agam and Seema, were reissued as fully paid-up @ ₹ 16 per share.
Pass the necessary journal entries to record the above transactions in the books of V.D. Ltd.
10 Konark Ltd. invited applications for issuing 3,00,000 shares of ₹ 10 each. The amount per share was payable as
follows: ₹ 3 on application, ₹ 3 on allotment, and ₹ 4 on first and final call.
The company received applications for 4,00,000 shares.
Allotment was done as follows:
(i) Applicants of 2,40,000 shares were allotted 2,00,000 shares.
(ii) Applicants of 1,20,000 shares were allotted 80,000 shares.
(iii) Remaining applicants were allotted 20,000 shares.
Money overpaid on applications was adjusted towards sums due on allotment. Divij, a shareholder, belonging to group
(ii), who had applied for 6,000 shares, failed to pay allotment and call money. Faisal, another shareholder, who was
allotted 10,000 shares, paid the call money along with allotment. Faisal belonged to group (i). Divij’s shares were
forfeited after the first and final call. Half of the forfeited shares were reissued @ ₹ 10 per share fully paid.
Pass the necessary journal entries to record the above transactions in the books of the company.
