The following information has been obtained from the Balance Sheet of Jay Ltd. as at 31st March, 2024 :
Balance Sheet of Jay Ltd. as at 31st March, 2024
| Particulars | Note No. | Amount (₹) |
|---|---|---|
| I – Equity and Liabilities : 1 Shareholders' Funds (a) Share Capital | 1 | 71,80,000 |
Notes to Accounts :
| Note No. | Particulars | Amount (₹) | Amount (₹) |
|---|---|---|---|
| 1 | Authorised capital / 1,00,000 Equity Shares of ₹ 100 each | 1,00,00,000 | |
| Issued capital / 75,000 Equity Shares of ₹ 100 each | 75,00,000 | ||
| Subscribed capital / Subscribed and fully paid up / 71,000 Equity Shares of ₹ 100 each | 71,00,000 | ||
| Subscribed but not fully paid up / 1,000 Equity Shares of ₹ 100 each | 1,00,000 | ||
| Less : Calls in Arrears | (20,000) | 80,000 | |
| 71,80,000 |
Answer the following questions :
- The total number of shares offered to the public for subscription are : (A) 71,000 (B) 70,400 (C) 70,000 (D) 75,000
- The amount of unissued share capital of the company is : (A) ₹ 25,00,000 (B) ₹ 29,00,000 (C) ₹ 29,60,000 (D) ₹ 20,32,000
- The subscribed capital of the company is : (A) ₹ 71,80,000 (B) ₹ 71,00,000 (C) ₹ 80,00,000 (D) ₹ 1,00,00,000
- The registered capital of the company is : (A) ₹ 71,80,000 (B) ₹ 80,00,000 (C) ₹ 1,00,00,000 (D) ₹ 71,00,000
- The amount per share not received on the shares shown under 'subscribed but not fully paid up capital' is : (A) ₹ 100 (B) ₹ 20 (C) ₹ 1,000 (D) ₹ 80,000
- If the shares shown under 'subscribed but not fully paid up capital' are forfeited, 'Share Forfeiture Account' will appear at : (A) ₹ 20,000 (B) ₹ 80,000 (C) ₹ 1,00,000 (D) ₹ 71,00,000
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Start your 14-day free trial to unlock the full solution →The solution identifies the number of shares offered for subscription (75,000), the amount of unissued share capital (₹ 25,00,000), the subscribed capital (₹ 71,80,000, interpreted as paid-up capital in this context), the registered capital (₹ 1,00,00,000), the amount per share not received (₹ 20), and the amount that would appear in the Share Forfeiture Account upon forfeiture (₹ 80,000).
Understanding Share Capital Categories
To correctly answer these questions, it's essential to understand the different classifications of share capital as presented in a company's financial statements. These categories help in depicting how much capital a company is authorised to raise, how much it has offered to the public, how much has been subscribed, and how much has actually been received.
- Authorised Capital (or Registered/Nominal Capital): This is the maximum amount of share capital that a company is legally permitted to issue to its shareholders, as stated in its Memorandum of Association. It is not a part of the Balance Sheet total but is disclosed in the Notes to Accounts.
- Issued Capital: This is the portion of the Authorised Capital that the company has offered to the public for subscription.
- Unissued Capital: This is the part of Authorised Capital that has not yet been offered to the public. It is calculated as Authorised Capital minus Issued Capital.
- Subscribed Capital: This is the portion of the Issued Capital that has been applied for and allotted to the public. It is further divided into:
- Subscribed and fully paid up: Shares on which the full nominal (face) value has been called up by the company and has also been received from the shareholders.
- Subscribed but not fully paid up: Shares on which either the full nominal value has not been called up, or the full nominal value has been called up but not fully received (i.e., there are 'Calls in Arrears').
- Called-up Capital: This is the total amount that the company has demanded from its shareholders on the subscribed shares.
- Paid-up Capital: This is the actual amount of money received by the company from its shareholders against the shares allotted. It is calculated as Called-up Capital less 'Calls in Arrears'. This is the final figure that appears under 'Share Capital' in the Balance Sheet.
- Calls in Arrears: This represents the amount that has been called up by the company from its shareholders but has not yet been paid by them. It is deducted from the 'Subscribed but not fully paid up' portion to arrive at the net amount for that category, which then contributes to the Paid-up Capital.
- Share Forfeiture Account: When shares are forfeited due to non-payment of calls, the amount already received from the defaulting shareholders on those forfeited shares is transferred to the Share Forfeiture Account. This account represents a capital receipt for the company and is shown under 'Share Capital' in the Balance Sheet until the forfeited shares are reissued.
Solution
Let's address each question based on the provided information:
(i) The total number of shares offered to the public for subscription are:
The shares offered to the public for subscription refer to the Issued Capital.
From the Notes to Accounts:
Issued capital / 75,000 Equity Shares of ₹ 100 each.
Therefore, the total number of shares offered to the public for subscription is 75,000.
The correct option is (D) 75,000.
(ii) The amount of unissued share capital of the company is:
Unissued share capital is the difference between Authorised Capital and Issued Capital.
Unissued Capital = Authorised Capital - Issued Capital
Working Note 1: Calculation of Unissued Share Capital
- Authorised Capital (from Notes) = ₹ 1,00,00,000
- Issued Capital (from Notes) = ₹ 75,00,000
- Unissued Capital = ₹ 1,00,00,000 - ₹ 75,00,000 = ₹ 25,00,000
Therefore, the amount of unissued share capital is ₹ 25,00,000.
The correct option is (A) ₹ 25,00,000.
(iii) The subscribed capital of the company is:
Subscribed capital conceptually refers to the nominal value of shares for which applications have been received and allotments made.
From the Notes to Accounts:
- Subscribed and fully paid up: 71,000 Equity Shares of ₹ 100 each = ₹ 71,00,000
- Subscribed but not fully paid up: 1,000 Equity Shares of ₹ 100 each = ₹ 1,00,000
The total nominal value of subscribed shares is ₹ 71,00,000 + ₹ 1,00,000 = ₹ 72,00,000.
However, this amount (₹ 72,00,000) is not available in the given options. The amount shown as 'Share Capital' in the Balance Sheet (₹ 71,80,000) is the Paid-up Capital, which is the subscribed capital less calls in arrears. In multiple-choice questions, sometimes "subscribed capital" is used to refer to the net amount appearing in the Balance Sheet under the 'Share Capital' head, which is technically the Paid-up Capital. Given the options, ₹ 71,80,000 is the most appropriate choice as it represents the final amount of capital received and shown in the Balance Sheet.
While "Subscribed Capital" conceptually refers to the nominal value of shares subscribed (₹ 72,00,000 in this case), in the context of Balance Sheet presentation and multiple-choice questions, it is often used to refer to the net amount of capital that appears in the Balance Sheet, which is effectively the Paid-up Capital (Subscribed Capital less Calls in Arrears).
Working Note 2: Calculation of Subscribed Capital (as per Balance Sheet presentation)
- Subscribed and fully paid up = ₹ 71,00,000
- Subscribed but not fully paid up (net of Calls in Arrears) = ₹ 80,000
- Total Share Capital (Paid-up Capital) = ₹ 71,00,000 + ₹ 80,000 = ₹ 71,80,000 …
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