Shares Practice Questions

Question.1: Krishna Ltd. Issued 5,000 equity shares of Rs. 100 each at a premium of Rs. 25 per share.

On 1st January, 2008 the company received 12,000 applications of which 2,000 applications were rejected and their amount was refunded on 1st February, 2008 when remaining applicants were allotted shares on pro-rata basis.  The amount of shares is receivable as under:

On application   Rs.30    

On allotment   Rs. 45 (including premium)

On first call    Rs. 25  

On second call   Rs. 25

Allotment money was received in full on 15th February, 2008.  First call was made on 15th May, 2008, and received on 1st June, 2008 except on 25 shares held by Azad. His shares were forfeited on 1st October, 2008 and reissued on 15th October, 2008, credited at Rs.75 paid for Rs. 110 per shares to Yogi. Final call was made on 1st November, 2008 and received on 15th November, 2008 except on 100 shares held by Parvati.   Pass journal entries in the books of Krishna Ltd. (including entries relating to cash).

Question.2: AB Limited issued a prospectus inviting applications for 10,000 shares of Rs. 10 each at a premium of Rs. 5 per share, payable as follows:

On application Rs. 5,

On allotment Rs. 6 (Including premium)

On first and final call Rs. 4.

Applications were received for 18,000 shares, of which applications for 3,000 shares were rejected; the rest of the applicants were allotted 10,000 shares on Pro-rata basis. Excess application money was transferred to shares allotment account. All the amounts due were duly received except from David, holder of 100 shares who failed to pay allotment and call money. Pass necessary cash book and journal entries in the books of AB Limited.

Question.3    Diamond Ltd. Invited applications for issuing 100,000 shares of Rs. 10 each at a premium of Rs. 1 per share. The amount was payable as follows:

On application                          Rs. 3 per share,

On allotment                            Rs. 3 per share (including premium)

On first and final call          Rs. 3 per share,

On second and final call:         Balance amount

Applications for 1,60,000 shares were received. Allotment was made on the following basis:

(i) To applicants for 90,000 shares:           40,000 shares

(ii) To applicants for 50,000 shares:          40,000 shares

(iii) To applicants for 20,000 shares:          Full shares

Excess money paid on application is to be adjusted against the amount due on allotment and calls.

 Munna, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money.

Another shareholder Sarkit, who applied for 1,500 shares and belonged at category (ii), did not pay allotment, first and second and final call money.

All the shares of Munna and Sarkit were forfeited and were subsequently re- issued at Rs. 7 per share fully paid.

Pass necessary journal entries in the books of Diamond Ltd. Open calls-in-arrears account and calls-in-advance account whenever required and extract of Balance sheet.

Question.4  M finance Ltd. issued for public subscription 50,000 equity shares of 10 each at premium 2 per share payable as follows 

On application Rs. 5, on allotment  Rs. 3, including premium, on first call Rs. 2, on final call Rs. 2.

Application were received for 80,000 shares. Allotment was made on the following basis:

(a) To applicants for 10,000 shares in full

(b) To applicants for 50,000 shares 30,000 shares.

(c) To applicants for 20,000 shares 10,000 shares.

All excess money paid on application was to be adjusted against amount due on allotment and calls. All the money received on shares except the following:

(i) Suresh (out of group applying for 50,000 shares) to whom 300 shares were allotted failed to pay the two calls.

(ii) Mahesh ( out of group applying for 20,000 shares) who applied for 400 shares failed to pay the final call. 

All the shares on which calls were not paid were forfeited by the Directors of the Company. Of the shares forfeited 400 shares were reissued as fully paid to Mr. Sony for 9 per share, the whole of Suresh shares being included.

Pass the necessary journal entries in the books of the company.

Question 5. AB Limited issued a prospectus inviting applications for 10,000 shares of Rs. 10 each a premium of Rs. 5 per share, payable as follows:

On application Rs. 5

On allotment Rs. 6( including premium)

On first and final Call Rs. 4

Applications were received for 18,000 shares, of which applications for 3,000 shares were rejected; the rest of the applicants were allotted 10,000 shares on pro-rata basis. Excess application money was transferred to shares allotment account. All the amounts due were duly received except from David, Holder of 100 shares who failed to pay allotment and call money. Pass necessary Journal entries in the books of AB Limited.

Question 6.  A Ltd. forfeited 100 equity shares of Rs. 10 each issued at a premium of 20% for the non- payment of final call of Rs. 5 including premium. State the maximum amount of discount at which these shares can be re- issued.

Question 7. P Ltd. issued a prospectus inviting applications for 25000 shares of Rs. 10 each at a premium of Rs. 2 per shares payable as follows: 

On Application: Rs. 2

On Allotment: Rs. 5 (Including Premium)

First Call: Rs. 2

Applications were received for 37,500 shares and pro- rata allotment was made on applications for 30,000 shares. It was decided to utilize excess application money towards the allotment. Ramesh who applied for 600 shares failed to pay the allotment money and on his subsequent failure to pay the first call his shares were forfeited M the holder of 750 shares failed to pay the two calls and on such failure his shares were forfeited. Of these forfeited shares 1000 shares were sold to Krishna credited as fully paid for Rs. 9 per shares the whole of R's Shares being included. 

Question 8.  AB Ltd. invited applications for issuing 75,000 equity shares of Rs. 100 each at a premium of Rs. 30 per share. The amount was payable as follows 

On application and allotment Rs. 85 per share

On first and final call -  The balance amount.

Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and shares were allotted on pro-rata basis to the remaining applicants. 

Excess money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. 

A shareholder, who applied for 1000 shares, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs. 150 per share fully paid up.

Pass necessary journal entries for the above transactions in the books of AB Ltd.