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Shaktimaan Ltd… (Class 12 Accountancy SQP 2023-24, Q23b)

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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(b)

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

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

Shaktimaan Ltd. invited applications for issuing 1,00,000 Shares of ₹10 each at a premium of ₹2 per share. The amount was payable as ₹4 on application (including premium); ₹5 on Allotment and balance on call. Applications were received shares for 1,80,000 of which Applications for 30,000 shares were rejected and remaining applicants were allotted on pro-rata basis.
Manthan, holding 5,000 shares failed to pay call money and his shares were forfeited. Out of these 2,000 shares were re-issued at premium of ₹3 per share.
Prepare Cash Book and pass necessary entries.

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

With a Cash Book, cash receipts and payments go there, not in the journal.

Hint 2

Allotment money due less the excess already received is what comes in on allotment.

Hint 3

Reissue at a premium means no discount, so the whole forfeited amount on those shares is a gain.

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. Applications for 1,50,000 shares were allotted 1,00,000 (pro rata 3 : 2). Application money ₹ 4 = ₹ 2 capital + ₹ 2 premium. Excess = 50,000 × ₹ 4 = ₹ 2,00,000 to allotment.

    ParticularsDr. (₹)Cr. (₹)
    Share Application A/c Dr.6,00,000
    To Share Capital A/c2,00,000
    To Securities Premium A/c2,00,000
    To Share Allotment A/c2,00,000
    (Being application money transferred and excess adjusted)
    1 mark

  2. Allotment, call and calls in arrears

    ParticularsDr. (₹)Cr. (₹)
    Share Allotment A/c Dr.5,00,000
    To Share Capital A/c5,00,000
    (Being allotment money due)
    Share First and Final Call A/c Dr.3,00,000
    To Share Capital A/c3,00,000
    (Being call money due)
    Calls in Arrears A/c Dr.15,000
    To Share First and Final Call A/c15,000
    (Being call unpaid by Manthan on 5,000 shares)
    1 mark

  3. Forfeiture and gain on reissue. Manthan paid ₹ 7 of capital per share: ₹ 35,000 forfeited. 2,000 shares reissued at ₹ 13 (₹ 3 premium), so the full 2,000 × ₹ 7 = ₹ 14,000 goes to Capital Reserve.

    ParticularsDr. (₹)Cr. (₹)
    Share Capital A/c Dr.50,000
    To Share Forfeited A/c35,000
    To Calls in Arrears A/c15,000
    (Being Manthan's 5,000 shares forfeited)
    Share Forfeited A/c Dr.14,000
    To Capital Reserve A/c14,000
    (Being gain on reissue of 2,000 shares transferred to Capital Reserve)
    1½ marks

  4. Cash Book (bank column)

    Particulars₹Particulars₹
    To Share Application A/c (1,80,000 × ₹ 4)7,20,000By Share Application A/c (refund)1,20,000
    To Share Allotment A/c3,00,000By Balance c/d12,11,000
    To Share First and Final Call A/c2,85,000
    To Share Capital A/c (reissue)20,000
    To Securities Premium A/c (reissue)6,000
    13,31,00013,31,000
    2½ marks

Answer: Journal: application ₹ 6,00,000 to capital ₹ 2,00,000, premium ₹ 2,00,000, allotment ₹ 2,00,000; allotment ₹ 5,00,000; call ₹ 3,00,000; calls in arrears ₹ 15,000; forfeiture ₹ 50,000 to Forfeited ₹ 35,000 and Calls in Arrears ₹ 15,000; Capital Reserve ₹ 14,000. Cash Book balance ₹ 12,11,000 (receipts ₹ 13,31,000, refund ₹ 1,20,000)

Where the marks are

  • Application entry (1 mark)
  • Allotment, call and arrears entries (1 mark)
  • Forfeiture and capital reserve (1½ marks)
  • Cash Book (2½ marks)

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.