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K.N. Ltd. invited… (Class 12 Accountancy SQP 2024-25, Q23a)

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AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 6 marks · Long answer

CBSE Class 12 Accountancy sample paper 2024-25: question 23(a)

From the official CBSE sample question paper for 2024-25, 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

K.N. Ltd. invited applications for issuing 6,00,000 equity shares of ₹10 each at a premium of ₹3 per share. The amount was payable as follows: On Application and Allotment - ₹3 per share; On First Call -₹4 per share; On Second and Final Call — Balance (including premium). The issue was oversubscribed by 1,50,000 shares. Applications for 50,000 shares were rejected and the application money was refunded. Shares were allotted to the remaining applicants as follows:
Category I: Those who had applied for 4,00,000 shares were allotted 3,00,000 shares on pro-rata basis.
Category II: The remaining applicants were allotted the remaining shares.
Excess application money received with applications was adjusted towards sums due on first call. Rakesh to whom 6,000 shares were allotted (out of Category I) failed to pay the first call money. His shares were forfeited. The forfeited shares were re-issued at ₹13 per share fully paid up after the second call. Pass necessary journal entries for the above transactions in the books of K.N. Ltd.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

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

Hint 1

Excess money from Category I goes to the first call, not allotment.

Hint 2

Find how many shares Rakesh applied for at 4 : 3.

Hint 3

After the second call, reissue at ₹ 13 includes ₹ 3 premium and no 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. Applications = 6,00,000 + 1,50,000 = 7,50,000 shares; 50,000 rejected. Category I applied for 4,00,000 and got 3,00,000 (excess 1,00,000 × ₹ 3 = ₹ 3,00,000 to first call); Category II got what it applied for.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.22,50,000
    To Share Application and Allotment A/c22,50,000
    (Being application money received on 7,50,000 shares)
    Share Application and Allotment A/c Dr.22,50,000
    To Equity Share Capital A/c18,00,000
    To Share First Call A/c3,00,000
    To Bank A/c1,50,000
    (Being application money adjusted and excess refunded)
    1 mark

  2. Rakesh (6,000 shares) applied for 8,000; his excess ₹ 6,000 reduces his call of ₹ 24,000, leaving ₹ 18,000 unpaid.

    ParticularsDr. (₹)Cr. (₹)
    Share First Call A/c Dr.24,00,000
    To Equity Share Capital A/c24,00,000
    (Being first call due)
    Bank A/c Dr.20,82,000
    Calls in Arrears A/c Dr.18,000
    To Share First Call A/c21,00,000
    (Being first call received except on 6,000 shares)
    1½ marks

  3. Rakesh paid ₹ 18,000 + ₹ 6,000 = ₹ 24,000 towards ₹ 7 of capital called per share.

    ParticularsDr. (₹)Cr. (₹)
    Equity Share Capital A/c Dr.42,000
    To Share Forfeited A/c24,000
    To Calls in Arrears A/c18,000
    (Being 6,000 shares forfeited)
    1 mark

  4. Second and final call ₹ 6 (₹ 3 capital + ₹ 3 premium) on the remaining 5,94,000 shares.

    ParticularsDr. (₹)Cr. (₹)
    Share Second and Final Call A/c Dr.35,64,000
    To Equity Share Capital A/c17,82,000
    To Securities Premium A/c17,82,000
    (Being second and final call due)
    Bank A/c Dr.35,64,000
    To Share Second and Final Call A/c35,64,000
    (Being second and final call received)
    1 mark

  5. Reissue at ₹ 13 fully paid: no discount, so the whole ₹ 24,000 forfeited goes to Capital Reserve.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.78,000
    To Equity Share Capital A/c60,000
    To Securities Premium A/c18,000
    (Being forfeited shares reissued at ₹ 13)
    Share Forfeited A/c Dr.24,000
    To Capital Reserve A/c24,000
    (Being balance transferred to Capital Reserve)
    1½ marks

Answer: Application ₹ 22,50,000 (₹ 18,00,000 capital, ₹ 3,00,000 to first call, ₹ 1,50,000 refunded); first call ₹ 24,00,000, ₹ 20,82,000 received; forfeiture ₹ 42,000 to Forfeited ₹ 24,000 and Arrears ₹ 18,000; second call ₹ 35,64,000; reissue ₹ 78,000; Capital Reserve ₹ 24,000

Where the marks are

  • Application entries (1 mark)
  • First call entries (1½ marks)
  • Forfeiture (1 mark)
  • Second call entries (1 mark)
  • Reissue and capital reserve (1½ 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 2024-25: 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.