Page 84 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

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Assets
Liabilities
`

Share Capital:
Fixed Assets:

Authorised
Issued and Subscribed: 60,00,000 Land and Buildings 25,00,000
20,00,000

Plant and Machinery
4,80,000 equity shares of ` 10 each fully Furniture and Fittings 11,70,000
paid up (of the above 60,000 equity 48,00,000
shares are issues as fully paid up bonus
shares)
Unit 3: Reissue of Forfeited Shares and Bonus Issue
Reserve & Surplus: Current Assets:
Loans and Advances:
Capital Reserve 37,500 Stock 15,00,000
General Reserve 13,44,000 Debtors 16,59,000 Notes
Profit and Loss Account (11,61,000 + 12,06,000 Cash in hand 53,000
45,000)
Current Liabilities and Provisions: Cash at bank 2,500
Sundry Creditors 10,00,000 Unexpired
Provision for Taxation 5,00,000 Insurance 3,000
88,87,500 88,87,500

Working Note:
1. Bank Balance = ` 2,80,000 + 6,60,000 + 480,000 – 1,41,7500 = ` 2,500
2. No. of Equity shares = ` 3,00,000 + 60,000 + 1,20,000 = ` 4,80,000
3. Balance in General Reserve = ` 24,91,500 – 3,97,500 – 7,50,000 = ` 13,44,000

Example 8: (Adjustment of Bonus into Final Call)
Abhijeet Co. Limited whose issued share capital on 31st March, 2006, consisted of 30,000; 7%
redeemable preference shares of ` 100 each fully paid up and 1,00,000 equity shares of ` 100 each,
` 80 paid up, decided to redeem the preference shares at a premium of 5%. The balance sheet of
the company as on 31st March, 2006 showed a general reserve of ` 45,00,000 and a capital reserve
of ` 5,10,000. The redemption was effected partly out of profits and partly out of the proceeds of
a fresh issue of 15,000 equity shares of ` 100 each at a premium of ` 30 per share.
On 1st May, 2006, the company at its general meeting resolved that all capital reserve will be
applied towards the declaration of bonus at the rate of ` 20 per share on equity shares, for the
purpose of making the said equity shares fully paid.
Pass the necessary journal entries to record the above mentioned transactions in the books of the
company.
Solution:
Abhijeet Co. Limited
Journal
Date Particulars ` `
7% Redeemable Preference Share Capital Dr. 30,00,000
Account
Premium on Redemption Account Dr. 1,50,000
To Preference Shareholders Account 31,50,000
(Being amount due to preference shareholder
on redemption)
Bank Account Dr. 19,50,000
To Equity Share Capital Account 15,00,000
To Share Premium Account 4,50,000
(Being 15,000 equity shares issued of ` 100
each at premium)
Share Premium Account Dr. 1,50,000
To Premium on Redemption Account 1,50,000
(Being utilisation of share premium in
writing off the premium on redemption)
General Reserve Account Dr. 15,00,000 Contd...
To Capital Redemption Reserve Account 15,00,000
(Being utilisation of general reserve for
redemption of capital)
LOVELY PROFESSIONAL UNIVERSITY 77
Preference Shareholders Account Dr. 31,50,000
To Bank Account 31,50,000
(Being payment made to preference
shareholders on redemption)
Equity Shares Find Call Account Dr. 20,00,000
To Equity Share Capital Account 20,00,000
(Being final call of ` 20 each due on 1,00,000
equity shares)
Capital Reserve Account Dr. 5,10,000
Capital Redemption Reserve Account Dr. 14,90,000
To Bonus to Shareholders Account 20,00,000
(Being bonus declared to make fully paid up
shares)
Bonus to Share-holders Account Dr. 20,00,000
To Equity Shares Final Call Account 20,00,000
(Being adjustment of bonus in final call of
equity shares)