Balance Sheet as on March 31, 2016 of M/s Rajvansh Ltd. : Note No. ₹ I EQUITY & LIABILITIES (1) Shareholder's Fund (a) Share Capital 1 2,99,500 (b) Reserves & Surpluses 2 48,000 (2) Current Liabilities 3 1,72,500

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2017
Balance Sheet as on March 31, 2016 of M/s Rajvansh Ltd. : Note No. ₹ I EQUITY & LIABILITIES (1) Shareholder's Fund (a) Share Capital 1 2,99,500 (b) Reserves & Surpluses 2 48,000 (2) Current Liabilities 3 1,72,500 TOTAL 5,20,000 II ASSETS (1) Non-Current Assets 3,00,000 (2) Current Assets (including Bank Balance of ₹1,00,000) 2,20,000 TOTAL 5,20,000 Note 1 : Share Capital : 2,000 Equity Shares of ₹100 each 2,00,000 1,000 9% Redeemable Preference Shares of ₹100 each 1,00,000 Less: Calls in Arrears ₹20 per share 500 99,500 Total 2,99,500 Note 2 : Reserves & Surpluses : General Reserve 30,000 Securities Premium 18,000 Total 48,000 Note 3 : Current Liabilities : Suppliers 1,22,500 Bills Payable 50,000 Total 1,72,500 The Directors forfeited the Preference Shares for non-payment of calls after giving notice to the shareholders and thereafter redeemed the Preference Shares at a premium of 10%. For the purpose, the company made a fresh issue of Equity Shares of ₹100 each at a premium of 5% for such amount as was necessary, after taking into account the utilisation of available sources to the maximum extent. All the shares were subscribed and money received in full. Pass necessary Journal entries for the above transactions.

Answer & Explanation:

In the Books of M/s Rajvansh Ltd. Journal Entries Particulars Amt. (Dr.) Amt. (Cr.) (a) 9% Redeemable Preference Shares A/c Dr. 2,500 To Calls in Arrears 500 To Share Forfeiture A/c 2,000 (Being shares forfeited) (b) Shares Forfeiture A/c Dr. 2,000 To Capital Reserve 2,000 (Being balance of Share Forfeiture account transferred to Capital Reserve) (c) 9% Preference Share Capital A/c Dr. 97,500 Premium on Redemption of 9% Preference shares A/c Dr. 9,750 To 9% Preference Shareholders' A/c 1,07,250 (Being claim of 9% Preference Shareholders due) (d) Bank A/c Dr. 70,875 To Equity Share Capital 67,500 To Securities Premium A/c 3,375 (Being fresh issue done for redemption) (e) General Reserve A/c Dr. 30,000 To Capital Redemption Reserve 30,000 (Being Capital Redemption Reserve Created) (f) Securities Premium A/c Dr. 9,750 To Premium on Redemption of Preference shares A/c 9,750 (Being premium on redemption written off) (g) 9% Preference Shareholders' A/c Dr. 1,07,250 To Bank 1,07,250 (Being payment made to preference shareholders) Working Notes: Number of shares forfeited: 500/20 = 25 shares Amount due on these shares = 25 × 100 = ₹2,500 Amount received by company i.e. forfeited by company = 25 × 80 = ₹2,000 Amount not received by company i.e., Calls in Arrears = 25 × 20 = ₹500 Requirement of Fresh Issues: Face Value of Preference Shares to be Redeemed = Capital Redemption Reserve + Proceeds of Fresh Issue ₹97,500 (975 × 100) = ₹30,000 (General Reserve) + ₹67,500 (Balancing Figure) Premium on Redemption of 9% Preference Shares = 97,500 × 10% = ₹9,750

Topics: Share Capital

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