Question of 74
Q.Write short notes on:
(a) Calls-in-Advance
(b) Securities Premium.
Or
B. Co. Ltd. issued 3,000 Equity Shares of ₹ 10 each including premium of ₹ 2 per share payable as ₹ 3 per share on application, ₹ 5 per share (including ₹ 2 as premium) on Allotment and ₹ 4 per share on call. All the shares were subscribed. Money due on all shares was fully received except Ram, holding 50 shares, failed to pay the allotment and call money. His shares were forfeited and subsequently reissued to Jadu as fully paid-up at a discount of ₹ 2 per share.
Pass the Journal entries of forfeiture and reissue of the shares in the books of the B. Co. Ltd.
West Bengal WbchseWBCHSE West Bengal HS (Class-12) Commerce Board 2022Subjective· 4mImportance★★★★★
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Start your 14-day free trial to unlock the full solution →Calls-in-Advance = amount received from a shareholder ahead of the call being due (a liability, carrying interest up to 12% p.a.). Securities Premium = amount received above face value, a capital profit shown under 'Reserves & Surplus', with restricted uses under Section 52. The Or part passes forfeiture and reissue journal entries for Ram's 50 shares.
- Calls-in-Advance: When a shareholder pays the amount of one or more future calls before the company has actually made those calls, the excess is called Calls-in-Advance. It is not treated as part of called-up capital until the call is made; it is a liability of the company and shown on the liabilities side. As per Table F of the Companies Act, 2013, interest up to 12% p.a. is payable on it, and a shareholder paying in advance gets no voting rights or dividend on that advance.
- Securities Premium: The amount received by a company on the issue of shares over and above their face value is the securities premium. It is a capital profit, credited to the Securities Premium Account and shown under 'Reserves & Surplus'. Under Section 52 of the Companies Act, 2013 it can be used only for: issuing fully paid bonus shares, writing off preliminary expenses, writing off share/debenture issue expenses or commission/discount, providing the premium on redemption of redeemable preference shares or debentures, and buy-back of shares. Or — Journal entries for forfeiture and reissue in the books of B. Co. Ltd. Face value ₹10, premium ₹2; payable ₹3 on application, ₹5 (incl. ₹2 premium) on allotment, ₹4 on call. Ram (50 shares) paid only application money and failed on allotment and call.
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Equity Share Capital A/c (50 × 10) Dr. | 500 | |
| Securities Premium A/c (50 × 2, called but unpaid) Dr. | 100 | |
| To Share Forfeiture A/c (50 × 3 received) | 150 | |
| To Share Allotment A/c (50 × 5 unpaid) | 250 | |
| To Share Call A/c (50 × 4 unpaid) | 200 | |
| (Being 50 shares forfeited for non-payment) | ||
| Bank A/c (50 × 8) Dr. | 400 |
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