share capital

Vani Limited invited applications for issuing 1.00.000 equity shares of  ₹10 each at a premium of  10%. The amounts were payable as under:

On Application and Allotment ₹4 per share (including premium ₹1)

On First Call ₹4 per share

On Second and Final Call ₹3 per share.

Applications for 1,50,000 shares were received and pro rata allotment was made to all the applicants.

Excess application money was adjusted towards sums due on calls. Parth, a shareholder who had applied for 600 shares did not pay the first call. His shares were forfeited. The second and final call was not yet made. Half of  the forfeited shares were reissued at 8 per share fully paid-up.

Journalise the above transactions in the books of  Vani Limited by opening Calls-in-Arrears and Calls-in-Advance Account wherever necessary. (CBSE 2023)

 

Issued share capital 1,00,000 shares of  ₹10 each at ₹1 Premium

Subscribed Capital 1,50,000 shares

Payable as:

₹	4	On application and On allotment (Including 1 Premium)
₹	4	On first call
₹	3	On Second call
	30

 

Books of  Vani Limited Journal
Date		Particulars		L.F.	Debit  (₹)	Credit  (₹)
		Bank A/c (1,50,000 ×4)	Dr.		6,00,000
		To Share Application and allotment A/c				6,00,000
		(Share application money received for 1,50,000 shares at₹4 per share)
		Share Application and allotment A/c	Dr.		6,00,000
		To Share Capital A/c (1,00,000 ×4)				4,00,000
		To Securities Premium Reserves A/c				1,00,000
		To Call-In-Advance A/c				1,00,000
		(Share application Money transferred to Share Capital)
		Share First Call A/c (1,00,000×4)	Dr.		4,00,000
		To Share Capital A/c (1,00,000×4)				4,00,000
		(Share allotment due on 1,00,000 shares at₹4)
		Bank A/c	Dr.		2,99,200
		Call-In-Advance A/c	Dr.		1,00,000
		Calls-In-Arrears A/c	Dr.		800
		To Share First Call A/c				4,00,000
		(Being amount shares due on First call is received except 400 shares)
		Share Capital A/c  (400×7)    Dr.			2,800
		To Forfeited Shares A/c				2,000
		To Calls-In-Arrears A/c				800
		(Being share forfeited for non-Payment of  First Call of  400 shares)
		Bank A/c                   Dr.			1,600
		Forfeited Shares A/c              Dr.			400
		To Share Capital A/c				2,000
		(Being shares forfeited reissued)
		Forfeited Shares A/c              Dr.			600
		To Capital Reserve A/c				600
		(being balance in Forfeited Shares account of  reissued shares transferred to Capital Reserve)

 

Working Notes:

Half of  shares forfeited shares Re-issued

Amount Shares forfeited on 200 share = 2,000×200/400=1,000

Balance in Amount Shares forfeited After Discount, Which is to be transferred to Capital Reserve A/c = 1,000-400=600

 

Determine the maximum permissible discount and minimum reissue price that a company can allow atthe time of  reissue of  forfeited shares in the following cases:

(i) A share of  ₹10 originally issued at par on which application and allotment money of  ₹5 was received.

(ii) A share of  ₹10 originally issued at a premium of  ₹1 on which application and allotment moneyIncluding premium) of  ₹5 was received.

(iii) A share of  ₹10 originally issued at a premium of  ₹1 on which application and allotment money(Excluding premium) of  ₹5 was received.

 

 

Situations	Maximum Permissible  Discount	Minimum Reissue price
1	5	5
2	4	6
3	5	5

 

Star Ltd. issued 10,000 shares of  ₹10 each, payable as ₹4 on application, ₹3 on allotment, ₹2 on first call and balance on second and final call.

500 shares were forfeited. Calculate the 'Maximum Permissible Discount' and 'Minimum Reissue Price' on reissue in each of  the following cases, if the reissued shares are fully paid-up:

Case 1. If shares were forfeited for non-payment of  Second and Final Call.

Case 2. If shares were forfeited for non-payment of  First Call and Second and Final Call.

Case 3. If shares were forfeited for non-payment of  Allotment, First Call land Second and Final Call.

Case 4. If shares were forfeited for non-payment of  Allotment and First Call. Second and Final Call is not yet made.

 

Rule for allowing discount on reissue:

As per Company Act, 2013 (Section 53) Discount on reissue can be given up to the extent of  amount forfeited on re-issued shares.

And Reissue price cannot be less than amount received by company on forfeited shares.

 

Case 1. If shares were forfeited for non-payment of  Second and Final Call.

Maximum Permissible Discount - ₹9

Reason: Discount on reissue can be given up to the extent of  ₹9 forfeited on re-issued shares.

Minimum Reissue Price ₹1;

Reason: Reissue price cannot be than ₹1 received by company on forfeited shares.

 

Case 2. If shares were forfeited for non-payment of  First Call and Second and Final Call.

Maximum Permissible Discount - ₹7.

Reason: Discount on reissue can be given up to the extent of  ₹7 forfeited on re-issued shares.

Minimum Reissue Price - ₹3.

Reason: Reissue price cannot be than ₹3 received by company on forfeited shares.

 

Case 3. If shares were forfeited for non-payment of  Allotment, First Call land Second and Final Call.

Maximum Permissible Discount - ₹4.

Reason: Discount on reissue can be given up to the extent of  ₹4 forfeited on re-issued shares.

Minimum Reissue Price - ₹6.

Reason: Reissue price cannot be than ₹6 received by company on forfeited shares.

 

Case 4. If shares were forfeited for non-payment of  Allotment and First Call. Second and Final Call is not yet made.

Maximum Permissible Discount - ₹4.

Reason: Discount on reissue can be given up to the extent of  ₹4 forfeited on re-issued shares.

Minimum Reissue Price – ₹6

Reason: Reissue price cannot be than ₹6 received by company on forfeited shares.

 

Computer Mart Ltd. forfeited 1,000 Equity Shares of  ₹50 each issued at 10% premium on which allotment money of ₹15 per equity share (including premium) and first all of ₹15 per share were not received, the second and final call of ₹10 per equity share was not yet called.

Calculate 'Discount Allowed or Premium Received' and 'Amount transferred to Capital Reserve' on reissue of  shares as fully paid-up in each of  the following cases:

Case 1. If these shares were reissued as ₹40 paid-up for ₹45 per share.

Case 2. If these shares were reissued as ₹40 paid-up for ₹40 per share.

Case 3. If these shares were reissued as ₹40 paid-up for ₹35 per share.

Case 4. If these shares were reissued as ₹40 paid-up for ₹25 per share.

Case 5. If these shares were reissued at ₹35 per share as fully paid-up.

Case 1. If these shares were reissued as ₹40 paid-up for ₹45 per share.

Premium = 40- 45= 5

Total premium received = 1,000×5=5,000

Therefore, Premium received - ₹5,000

Amount forfeited ₹15,000,

Therefore, Amount transferred to Capital Reserve - ₹15,000;

 

Case 2. If these shares were reissued as ₹40 paid-up for ₹40 per share.

Premium or Discount = 40 – 40 = Nil

Therefore, Discount or Premium - Nil

Amount forfeited = ₹15,000:

Therefore, Amount transferred to Capital Reserve - ₹15,000:

 

Case 3. If these shares were reissued as ₹40 paid-up for ₹35 per share.

Discount = 40- 35= 5

Total discount = 1,000×5=5,000

Therefore, Discount Allowed - ₹5,000

Balance in Amount forfeited after discount = ₹15,000-₹5,000 = ₹10,000;

Therefore, Amount transferred to Capital Reserve - ₹10,000;

 

Case 4. If these shares were reissued as ₹40 paid-up for ₹25 per share.

Discount = 40- 25= 15

Total discount = 1,000×15=15,000

Therefore, Discount Allowed - ₹15,000

Balance in Amount forfeited after discount = ₹15,000-₹15,000 = Nil;

Therefore, Amount transferred to Capital Reserve - Nil;

 

Case 5. If these shares were reissued at ₹35 per share as fully paid-up.

Discount = 50- 35= 15

Total discount = 1,000×15=15,000

Discount Allowed - ₹15,000

Balance in Amount forfeited after discount = ₹15,000-₹15,000 = Nil;

Amount transferred to Capital Reserve - Nil