Page 107 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes capitalised, the directors were so authorised to: (a) declare a bonus dividend to make the
shares fully paid; (b) to issue 600 new equity shares of 10 each at a premium of 2.50 per
share on the basis of one equity share for every four equity shares held. Assuming that
Mohan Ltd. has passed the resolution for this purpose, pass the necessary journal entries in
its books.
5. The share capital of ABC Ltd. consists 40,000 shares of 100 each, 75 called up and paid.
It has 20,00,000 in general reserve. The directors recommended the following with a
view to capitalise the reserve:

(a) The existing shares to made fully paid without the shareholders having to pay
anything.

(b) Each shareholder to be given (proportionate to his holdings) bonus to the remaining
amount, the shares to be valued at 125. Assuming that the recommendation is
accepted and all legal formalities are completed. Pass journal entries and state in
what proportion bonus shares will be distributed among the shareholders.
A company having sufficient balance to the credit of Profit and Loss Account decided as
under:
(a) To redeem 6%, 16,000 redeemable preference shares of 10 each, fully paid at a
premium of 1 share.
(b) To apply the resultant reserve fund in paying the unissued shares of the company
distributed as fully paid equity shares of 10 each by way of bonus to its members.
Show the journal entries required to record the redemption and the bonus issue.
6. Ajanta Trading Co. Limited has an authorised capital of 8,00,000 divided into:

10,000; 6% redeemable preference shares of 10 each.
20,000; 7% preference shares of 100 each and 50,000 equity shares of 100 each.
On January 1, 2006 the whole of the two classes of preference shares and 15,000 of equity
shares stood in the books as fully paid. The share premium account as on that date showed
a balance of 20,000. The balance of profit was 32,000.

On July 1, 2006 it was decided to redeem the whole of 6% preference shares at a premium
of 1 per share and for this specific purpose the company issued for cash 8,000 equity
shares of 10 each at a premium of 2 per share, payable in full on allotment. All the
above shares were taken up. The cost of issue of shares amounted to 3,000.
On October 1, 2006 the company issued to the existing shareholders one bonus share of
10 each fully paid for each five held. It is the intension of the directors that minimum
reduction should be in revenue reserve account which starts at 125,000.
Give necessary journal entries.

7. On January 1, 1975 Shibpur Motors Ltd. issued 3,000, 7% redeemable preference shares of
10 each, all of which were taken on and fully paid. The shares were issued on condition
that the same at any time after March 31, 1981 could be redeemed at a premium of 4 per
share.

On June 30, 1982, the company decided to redeem the shares. For this purpose it issued
1,800, 6% preference shares of 10 each at a premium of 1 per share on July 15, 1982. The
shares were subscribed and paid for by July 31, 1982. The 7% redeemable preference shares
were redeemed at the same date.

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