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The Directors of… (Class 12 Accountancy SQP 2023-24, Q23a)

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AccountancyCBSE Class 12 · Sample paper, session 2023-24 · 6 marks · Long answer

CBSE Class 12 Accountancy sample paper 2023-24: question 23(a)

From the official CBSE sample question paper for 2023-24, section A, question 23(a), for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q23(a) · 6 marks · Long answerAccounting for Share Capital

The Directors of Rockstar Ltd. invited applications for 2,00,000 Shares of ₹10 each, issued at 20% premium. Share was payable as ₹5 on application, ₹4 (including premium) on allotment and balance on call. Public had applied for 3,20,000 shares out of which applications for 20,000 shares were rejected and remaining were alloted on pro-rata basis.
Simba, an applicant of 15,000 shares failed to pay allotment and call money. His shares were forfeited and out of these 6,000 shares were reissued at a discount of ₹2 per share.
Journalise.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Allotment ratio is 3,00,000 : 2,00,000; work out how many shares Simba got.

Hint 2

Simba's excess application money reduces what he owes on allotment.

Hint 3

Capital Reserve = forfeited amount on reissued shares − discount.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Issue price ₹ 12. Applications for 3,00,000 shares were allotted 2,00,000 (pro rata 3 : 2). Excess application money = 1,00,000 × ₹ 5 = ₹ 5,00,000, adjusted against allotment.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.16,00,000
    To Share Application A/c16,00,000
    (Being application money received on 3,20,000 shares)
    Share Application A/c Dr.16,00,000
    To Share Capital A/c10,00,000
    To Share Allotment A/c5,00,000
    To Bank A/c1,00,000
    (Being application money transferred, excess adjusted and rejected applications refunded)
    1 mark

  2. Simba applied for 15,000 and got 10,000 shares; his excess ₹ 25,000 covers part of his ₹ 40,000 allotment, leaving ₹ 15,000 unpaid.

    ParticularsDr. (₹)Cr. (₹)
    Share Allotment A/c Dr.8,00,000
    To Share Capital A/c4,00,000
    To Securities Premium A/c4,00,000
    (Being allotment money due)
    Bank A/c Dr.2,85,000
    Calls in Arrears A/c Dr.15,000
    To Share Allotment A/c3,00,000
    (Being allotment money received except from Simba)
    1 mark

  3. Call ₹ 3 per share; Simba owes 10,000 × ₹ 3 = ₹ 30,000.

    ParticularsDr. (₹)Cr. (₹)
    Share First and Final Call A/c Dr.6,00,000
    To Share Capital A/c6,00,000
    (Being call money due)
    Bank A/c Dr.5,70,000
    Calls in Arrears A/c Dr.30,000
    To Share First and Final Call A/c6,00,000
    (Being call money received except from Simba)
    1 mark

  4. Forfeiture of Simba's 10,000 shares. Following the marking scheme, the ₹ 15,000 unpaid on allotment is taken as unpaid premium, so capital received = ₹ 50,000 (application) + ₹ 20,000 (allotment) = ₹ 70,000.

    ParticularsDr. (₹)Cr. (₹)
    Share Capital A/c Dr.1,00,000
    Securities Premium A/c Dr.15,000
    To Share Forfeited A/c70,000
    To Calls in Arrears A/c45,000
    (Being Simba's 10,000 shares forfeited)
    1½ marks

  5. Reissue of 6,000 shares at ₹ 8 (discount ₹ 2).

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.48,000
    Share Forfeited A/c Dr.12,000
    To Share Capital A/c60,000
    (Being 6,000 forfeited shares reissued at ₹ 2 discount)
    1 mark

  6. Forfeited on 6,000 shares = 6,000 × ₹ 7 = ₹ 42,000; less discount ₹ 12,000 = ₹ 30,000 gain.

    ParticularsDr. (₹)Cr. (₹)
    Share Forfeited A/c Dr.30,000
    To Capital Reserve A/c30,000
    (Being gain on reissue transferred to Capital Reserve)
    ½ mark

Answer: Bank ₹ 16,00,000; application transfer ₹ 10,00,000 capital, ₹ 5,00,000 to allotment, ₹ 1,00,000 refund; allotment ₹ 8,00,000 due, ₹ 2,85,000 received; call ₹ 6,00,000 due, ₹ 5,70,000 received; forfeiture: Share Capital ₹ 1,00,000 and Securities Premium ₹ 15,000 Dr. to Share Forfeited ₹ 70,000 and Calls in Arrears ₹ 45,000; reissue Bank ₹ 48,000 and Forfeited ₹ 12,000; Capital Reserve ₹ 30,000

Where the marks are

  • Application entries (1 mark)
  • Allotment entries (1 mark)
  • Call entries (1 mark)
  • Forfeiture entry (1½ marks)
  • Reissue entry (1 mark)
  • Transfer to Capital Reserve (½ mark)

Revise the chapter

Practise this chapterBoard-style questions from Accounting for Share Capital, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.