Willow Ltd. was registered with an authorized capital of ₹ 10,00,000 divided into 1,00,000 equity shares of ₹ 10 each. The company offered 80,000 shares for subscription to the public, out of which 75,000 shares were subscribed. All amounts were received except the final call of ₹ 2 per share on 3,000 shares. Fill in the missing figures in the Balance Sheet of Willow Ltd. as per the provisions of Schedule III, Part I of the Companies Act, 2013. Balance Sheet as at 31st March, 2018 (An extract)
| Particulars | Note No. | ₹ |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| 1. Shareholders Funds | ||
| (a) Share Capital | 1 | .......... |
| .......... |
Note to Accounts
| Note No. | Particulars | ₹ |
|---|---|---|
| 1 | Share Capital | |
| Authorised Capital | ||
| .......................................... | .......... | |
| Issued Capital | ||
| .......................................... | .......... | |
| Subscribed Capital | ||
| Subscribed and full paid ________ shares of ₹ 10 each | .......... | |
| Subscribed but not fully paid ________ shares of ₹ 10 each .......... | ||
| Less ................. .......... | .......... | |
| .......... |
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Start your 14-day free trial to unlock the full solution →Solution: Willow Ltd. – Balance Sheet (Share Capital Extract)
Share Capital to be shown: ₹7,44,000 (₹7,50,000 subscribed less ₹6,000 calls-in-arrear on 3,000 shares).
Concept: Share Capital Disclosure under Schedule III
When a company issues shares and receives subscription, the Share Capital in the Balance Sheet must reflect the subscribed amount, not the authorized capital. Schedule III, Part I of the Companies Act, 2013 requires the following treatment:
- Authorized Capital is disclosed in the notes as the maximum capital the company can raise (here ₹10,00,000).
- Issued Capital is the portion offered to the public (here 80,000 shares).
- Subscribed Capital is what investors actually applied for (here 75,000 shares).
- Within subscribed capital, we distinguish:
- Subscribed and fully paid: shares on which all calls have been received.
- Subscribed but not fully paid: shares on which some calls remain unpaid.
- Calls-in-Arrear (unpaid calls) are deducted from subscribed capital to arrive at the net Share Capital figure shown on the face of the Balance Sheet.
The accounting rule: Share Capital is a liability (owners' equity), so it is credited when shares are issued. When calls are not received, we do not reduce the Share Capital account itself in the books (it remains at the subscribed amount), but for presentation in the Balance Sheet, we show the arrear as a deduction to reflect the actual cash received.
Working Notes
WN 1: Call Schedule per Share
Each equity share is of ₹10. The question states "all amounts were received except the final call of ₹2 per share on 3,000 shares." This tells us:
- Final call = ₹2 per share.
- The remaining ₹8 per share (Application, Allotment, and any earlier calls) has been fully received on all 75,000 subscribed shares.
WN 2: Subscribed Capital Breakdown
| Category | Number of Shares | Amount per Share | Total Amount (₹) |
|---|---|---|---|
| Subscribed and fully paid | 72,000 | ₹10 | ₹7,20,000 |
| Subscribed but not fully paid | 3,000 | ₹10 | ₹30,000 |
| Total Subscribed Capital | 75,000 | ₹7,50,000 |
The 3,000 shares are "subscribed but not fully paid" because the final call of ₹2 has not been received on them. However, they are still subscribed at the face value of ₹10 each.
WN 3: Calls-in-Arrear
Calls-in-Arrear = Number of shares × Amount unpaid per share
= 3,000 shares × ₹2 = ₹6,000
This amount is shown as a deduction from Subscribed Capital in the note.
WN 4: Net Share Capital (Balance Sheet figure)
Share Capital (to appear on the face of the Balance Sheet)
= Subscribed Capital − Calls-in-Arrear
= ₹7,50,000 − ₹6,000 = ₹7,44,000
Solution: Balance Sheet Extract
Balance Sheet of Willow Ltd. as at 31st March, 2018 (Extract)
| Particulars | Note No. | ₹ |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| 1. Shareholders' Funds | ||
| (a) Share Capital | 1 | 7,44,000 |
Note to Accounts
| Note No. | Particulars | ₹ | …
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