Page 85 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Particulars
Date

Dr.

Account
Premium on Redemption Account

1,50,000
Dr.

To Preference Shareholders Account

(Being amount due to preference shareholder
on redemption)

Bank Account

19,50,000
Dr.
7% Redeemable Preference Share Capital L.F. 30,00,000 31,50,000
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
Accounting for Companies-I
To Premium on Redemption Account 1,50,000
(Being utilisation of share premium in
writing off the premium on redemption)
Notes General Reserve Account Dr. 15,00,000
To Capital Redemption Reserve Account 15,00,000
(Being utilisation of general reserve for
redemption of capital)
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)

Self Assessment
Fill in the blanks:
10. The objective of .............................. is that there should be an equitable distribution of
shares and the holding of shares by each shareholder should not be affected by the issue of
new share.
11. The amount paid to acquire the .............................. should be added to the total market
value of the shares.
12. After the expiry of the .............................. in the notice from the shareholder to whom the
notice is served, the board of directors may dispose off the shares.
13. Calculating application money due on shares allotted to defaulters by multiplying the
shares allotted to defaulters the result is the excess ............... to adjust in allotment money.
State True or False:
14. Forfeited amount is transferred to the forfeited share account.

15. By virtue of this lien, the company has a prior right to the shares over any creditor to
whom they are given as a security for a loan.

3.6 Summary

 If a company has a reputation in the market, there is a possibility that shares applied for
would be more than what the company proposes to issue.

 In such a condition it is not possible for a company to allot shares to all the applicants;
therefore, the company rejects some applications altogether and allots in full to some
applicants

 If there is no provision to reissue the forfeited shares in the Articles of Association, Table
A of Companies Act confers the power upon them to do so.

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