CBSE Class 12 Accountancy sample paper 2025-26: question 23
From the official CBSE sample question paper for 2025-26, section A, question 23, for 6 marks. Try it first; the hints and our step-by-step solution are below.
Q23 · 6 marks · Long answerCompetency-basedAccounting for Share Capital
Extract of Financial statements of Alexa Ltd are produced below.
Balance Sheet (Extract)
| Equity and Liabilities | Note no. | 31-03-25 (₹) | 31-03-24 (₹) |
|---|---|---|---|
| Shareholders funds | |||
| Equity Share capital | 1 | 2,37,60,000 | 2,00,00,000 |
| Reserves and Surplus | 2 | 20,00,000 | 10,00,000 |
Note No. 1 Share Capital
| 31-03-25 (₹) | 31-03-24 (₹) | |
|---|---|---|
| Authorised Share Capital: Equity shares of Rs.10 each | ------- | ------- |
| Issued Capital | 2,37,60,000 | 2,00,00,000 |
| Subscribed capital (Fully Paid) | 2,37,60,000 | 2,00,00,000 |
Note No. 2 Reserves and Surplus
| 31-03-25 (₹) | 31-03-24 (₹) | |
|---|---|---|
| Securities Premium | 20,00,000 | 10,00,000 |
During the year Alexa ltd. purchased business of Gloria ltd. with assets of Rs.50,00,000 and liabilities of Rs.20,00,000. With regards to the following additional Information:
1) During the year 40,000 Equity Shares were issued at a premium of Rs.4 per share for cash.
2) Besides this no shares were issued as sweat equity, bonus or as ESOP or in any other form.
Give journal entries for issue of shares for cash and consideration other than cash. Also, prepare Share Capital A/c and Securities Premium Account in the books of Alexa ltd.
Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2025-26.
Hints
Open one hint at a time and try again before the next.
Hint 1
The rise in share capital and in securities premium comes from two issues: cash and the vendor.
Hint 2
Take out the cash issue to find what was issued to Gloria Ltd.
Hint 3
Consideration minus net assets gives goodwill.
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 mark
Working. Cash issue: 40,000 shares × ₹ 10 = ₹ 4,00,000 capital and 40,000 × ₹ 4 = ₹ 1,60,000 premium. Increase in capital = 2,37,60,000 − 2,00,00,000 = ₹ 37,60,000, so shares to Gloria Ltd. = 37,60,000 − 4,00,000 = ₹ 33,60,000. Increase in premium = 20,00,000 − 10,00,000 = ₹ 10,00,000, so premium on shares to Gloria = 10,00,000 − 1,60,000 = ₹ 8,40,000. Purchase consideration = 33,60,000 + 8,40,000 = ₹ 42,00,000; net assets = 50,00,000 − 20,00,000 = ₹ 30,00,000; goodwill = ₹ 12,00,000.
- 1 mark
Shares issued for cash
Particulars Dr. (₹) Cr. (₹) Bank A/c Dr. 5,60,000 To Equity Share Application and Allotment A/c 5,60,000 (Being money received for 40,000 shares at ₹ 14) Equity Share Application and Allotment A/c Dr. 5,60,000 To Equity Share Capital A/c 4,00,000 To Securities Premium A/c 1,60,000 (Being shares allotted at a premium of ₹ 4) - 2 marks
Business of Gloria Ltd. taken over and shares issued to it
Particulars Dr. (₹) Cr. (₹) Sundry Assets A/c Dr. 50,00,000 Goodwill A/c Dr. 12,00,000 To Sundry Liabilities A/c 20,00,000 To Gloria Ltd. A/c 42,00,000 (Being business purchased) Gloria Ltd. A/c Dr. 42,00,000 To Equity Share Capital A/c 33,60,000 To Securities Premium A/c 8,40,000 (Being shares issued to Gloria Ltd. as purchase consideration) - 1 mark
Equity Share Capital A/c
Particulars ₹ Particulars ₹ To Balance c/d 2,37,60,000 By Balance b/d 2,00,00,000 By Equity Share Application and Allotment A/c 4,00,000 By Gloria Ltd. A/c 33,60,000 2,37,60,000 2,37,60,000 - 1 mark
Securities Premium A/c
Particulars ₹ Particulars ₹ To Balance c/d 20,00,000 By Balance b/d 10,00,000 By Equity Share Application and Allotment A/c 1,60,000 By Gloria Ltd. A/c 8,40,000 20,00,000 20,00,000
Answer: Cash issue: capital ₹ 4,00,000 + premium ₹ 1,60,000. Gloria Ltd.: consideration ₹ 42,00,000 (capital ₹ 33,60,000 + premium ₹ 8,40,000), goodwill ₹ 12,00,000. Closing balances: Share Capital ₹ 2,37,60,000; Securities Premium ₹ 20,00,000
Where the marks are
- Entries for cash issue (1 mark)
- Business purchase with goodwill ₹ 12,00,000 and issue to vendor (2 marks)
- Workings for consideration (1 mark)
- Share Capital A/c (1 mark)
- Securities Premium A/c (1 mark)
Revise the chapter
- Chapter: Accounting for Share Capital (notes, formulas, where marks are lost and every past question)
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