Accounting for Shares Class 12 MCQ with Answer are covered in this Article. Accounting for Shares MCQ Test contains 44 questions. Answers to MCQ on Accounting for Shares Class 12 Accountancy are available at the end of the last question. These MCQ have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.
Accounting for Shares Class 12 MCQ
1.Col Ltd issued 50000 equity shares of Rs 5 each at a premium of Rs 2 payable along with the application. All the shares were applied and duly alloted. The necessary journal entry to record the transaction will be:
(a) Bank A/c Dr 350000
To Equity share Application A/c 350000
Equity share Application A/c Dr 350000
To Equity share Application A/c 350000
(b) Bank A/c Dr 350000
To Equity share Application A/c 350000
Equity share Application Dr 350000
To Equity share capital A/c 250000
To Security premium Reserve A/c 100000
(c) Bank A/c Dr 350000
To Equity share Application 350000
& Allotment A/c
Equity share Application & Allotment A/c Dr 350000
To Equity share capital A/c 250000
To Security premium Reserve A/c 100000
(d) None of the above
Answer
Answer:
(c) Bank A/c Dr 350000
To Equity share Application 350000
& Allotment A/c
Equity share Application & Allotment A/c Dr 350000
To Equity share capital A/c 250000
To Security premium Reserve A/c 100000
Explanation: Bank A/c Dr 350000 ( 50000 X 5)
To Equity share Application and Allotment A/c 350000
Equity share Application and Allotment A/c Dr 350000
To Equity share capital A/c 250000
To Security premium Reserve A/c 100000
When issue price is payable in one installment or lump sum, then the entry should be passed through share application and allotment account.
2.M Ltd invited application for 500 equity shares of Rs 100 each at an issue price of Rs 100 .The amount payable along with application is Rs 100 .This issue was fully subscribed. The journal entries for the transactions will be:
(a) Bank A/c Dr 500
To Equity share Application & Allotment A/c 500
Equity share Application & Allotment A/c Dr 500
To Equity share capital A/c 500
(b) Bank A/c Dr 50000
To Equity share Application A/c 50000
Equity share Application A/c Dr 50000
To Equity share capital A/c 50000
(c) Bank A/c Dr 50000
To Equity share Application & Allotment A/c 50000
Equity share Application & Allotment A/c Dr 50000
To Equity share capital A/c 50000
(d) None of the above
Answer
Answer: (c) Bank A/c Dr 50000
To Equity share Application & Allotment A/c 50000
Equity share Application & Allotment A/c Dr 50000
To Equity share capital A/c 50000
Explanation: Bank A/c Dr 50000
To Equity share Application and Allotment A/c 50000 ( 500 X 100 )
Equity share Application and Allotment A/c Dr 50000
To Equity share capital A/c 50000
When issue price is payable in one installment or lump sum, then the entry should be passed through share application and allotment account.
3.Nokia Ltd was registered with a Capital of Rs 50000 in shares of Rs 5 each. It invited applications for 3000 Shares. The amount is payable as Rs 2 On application, Rs 1 on allotment, Rs 2 on first and final call. The whole of above issue was applied for and amount was duly received. The total cash received by the company is:
(a) 9000
(b) 15000
(c) 6000
(d) None of the above
Answer
Answer: (b) 15000
Explanation: Total cash received by the company
On Application 3000 X 2 = 6000
On Allotment 3000 X 1 = 3000
On first and final call 3000 X 2 = 6000
15000
4.DK Ltd was registered with a Capital of Rs 1500000 in shares of Rs 15 each. It invited applications for 60000 Shares. The amount is payable as Rs 10 On application, Rs 2 on allotment, 3 on first and final call. The whole of above issue was applied for and amount was duly received. The journal entry for First and final call will be :
(a) Bank A/c Dr 600000
To Share first and final call A/c 600000
(b) Bank A/c 900000
To Share first and final call A/c 900000
(c) Bank A/c Dr 180000
To Share first and final call A/c 180000
(d) None of the above
Answer
Answer: (c) Bank A/c Dr 180000
To Share first and final call A/c 180000
Explanation: Bank A/c Dr 180000
To Share first and final call A/c 180000 ( 60000 X 3 )
5.CAMIH Ltd was registered with a Capital of Rs 100000 in shares of Rs 10 each. It invited applications for 1000 Shares. The amount is payable as Rs 6 On application, Rs 2 on allotment, Rs 2 on first and final call. The whole of above issue was applied for and amount was duly received. The journal entry for application will be :
(a) Bank A/c Dr 2000
To Share Application A/c 2000
(b) Bank A/c Dr 6000
To Share Application A/c 6000
(c) Bank A/c 6000
To Share Application and allotment A/c 6000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 6000
To Share Application A/c 6000
Explanation: Bank A/c Dr 6000
To Share Application A/c 6000 ( 1000 X 6 )
Accounting for Shares Class 12 MCQ
6.Raj Ltd invited applications for 75000 shares of Rs 100 each at a premium of Rs 15 per share. Amount is payable as Rs 30 On application, Rs 45 on allotment and the balance on first and final call. The whole of above issue was applied for and amount was duly received. The journal entry for receiving allotment will be :
(a) Bank A/c Dr 3375000
To Share allotment A/c 2250000
To Security premium reserve A/c 1125000
(b) Bank A/c Dr 3375000
To Share allotment A/c 3375000
(c) Bank A/c Dr 3375000
To Share allotment A/c 1125000
To Security premium reserve A/c 2250000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 3375000
To Share allotment A/c 3375000
Explanation: Bank A/c Dr 3375000
To Share allotment A/c 3375000 ( 75000 X 30 + 15 )
(Security premium account is credited when entry for allotment due is made .)
7.Small Ltd invited applications for 60000 shares of Rs 10 each at a premium of Rs 5 per share. Amount is payable as Rs 3 On application, Rs 8 on allotment and the balance on first and final call. The whole of above issue was applied for and amount was duly received. The journal entry for allotment money due will be:
(a) Share allotment A/c Dr 480000
To Share capital A/c 300000
To Security premium Reserve A/c 180000
(b) Share allotment A/c Dr 480000
To Share capital A/c 480000
(c) Share allotment A/c Dr 480000
To Share capital A/c 180000
To Security premium Reserve A/c 300000
(d) None of the above
Answer
Answer: (c) Share allotment A/c Dr 480000
To Share capital A/c 180000
To Security premium Reserve A/c 300000
Explanation: Share allotment A/c Dr 480000 ( 60000 X ( 3 + 5 )
To Share capital A/c 180000 ( 60000 X ( 3 )
To Security premium Reserve A/c 300000 ( 60000 X ( 5 )
Security premium account is credited when entry for allotment due is made .
8.PNT Ltd invited application for 100000 equity shares of Rs 15 each at the issue price of Rs 15. The amount payable along with application is Rs 15. Application were received for 80000 shares. The journal entry for above transaction will be:
(a) Bank A/c Dr 1500000
To Equity share application & allotment A/c 1500000
Equity share application & allotment A/c 1500000
To Equity share capital A/c 1500000
(b) Bank A/c Dr 1200000
To Equity share application & allotment A/c 1200000
Equity share application & allotment A/c Dr 1200000
To Equity share capital A/c 1200000
(c) Bank A/c Dr 1195000
To Equity share application & allotment A/c 1195000
Equity share application & allotment A/c Dr 1195000
To Equity share capital A/c 1195000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 1200000
To Equity share application & allotment A/c 1200000
Equity share application & allotment A/c Dr 1200000
To Equity share capital A/c 1200000
Explanation: Bank A/c Dr 1200000
To Equity share application and allotment A/c 1200000 ( 80000 X 15 )
Equity share application and allotment A/c Dr 1200000
To Equity share capital A/c 1200000
9.On January 1st 2015, the Director of Samsung Ltd decided to issue 40000 shares of Rs 100 each. For such issue, Rs 50 was payable on application, Rs 20 was payable at the time of allotment and the balance on first and final call. Application were received for 75000 shares. Director decided to reject application in respect of 35000 shares, the money being refunded in full , as all allotment money was received in full. Journal entry for application will be:
(a) Bank A/c Dr 2000000
To Share application A/c 2000000
(b) Bank A/c Dr 3750000
To Share application A/c 3750000
(c) Bank A/c Dr 800000
To Share application A/c 800000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 3750000
To Share application A/c 3750000
Explanation: Money received on application = 75000 X 50
= 3750000
Bank A/c Dr 3750000
To Share application A/c 3750000
10.On 1 April, 2016 the Director of AB Ltd decided to issue 25000 shares of Rs 10 each. In respect of such issue, Rs 3 was payable on application and Rs 4 was payable at the time of allotment and the balance on first and final call. Application were received for 30000 shares from a single applicant. Directors decided to adjust excess application towards allotment. Money received on allotment will be:
(a) 70000
(b) 85000
(c) 50000
(d) None of the above
Answer
Answer: (b) 85000
Explanation: Amount received on application = 30000 X 3 = 90000
Less: Amount due towards application = 25000 X 3 = 75000
Surplus to be adjusted on allotment 15000 (Surplus to be adjusted on allotment)
Amount due on allotment = 25000 X 4 = 100000
Less: Surplus money 15000
85000 (Money received on allotment)
Accounting for Shares Class 12 MCQ
11.on 1st January, 2015 A company Silver Ltd offered to the public 60000 shares of Rs 50 each. The subscription price was payable as Rs 20 on application and Rs 15 was payable at the time of allotment and the balance on first and final call. Application were received for 75000 shares. Director decided to adjust excess application money towards allotment . The journal entry for transferring application money into share capital will be:
(a) Share application A/c Dr 2100000
To Share capital A/c 2100000
(b) Share application A/c Dr 1500000
To Share capital A/c 1500000
(c) Share application A/c Dr 1200000
To Share capital A/c 1200000
(d) Share application A/c Dr 1500000
To Share capital A/c 1200000
To Share allotment A/c 300000
Answer
Answer: (d) Share application A/c Dr 1500000
To Share capital A/c 1200000
To Share allotment A/c 300000
Explanation: Money received on application = 75000 X 20 = 1500000
Less: Money due = 60000 X 20 = 1200000
Surplus money to be adjusted towards allotment 300000
1 Bank A/c Dr 1500000
To Share application A/c 1500000
2 Share application A/c Dr 1500000
To Share capital A/c 1200000
To Share allotment A/c 300000
12.Maruti Ltd Purchased assets of Rs 900000 from Honda Ltd . Maruti Ltd issued equity shares of Rs 25 each fully paid in consideration. Journal entries in the books of Maruti Ltd if the shares are issued at par will be:
(a) Sundry Assets A/c Dr 900000
To Honda Ltd 900000
Bank A/c Dr 900000
To Equity share Capital A/c 900000
(b) Sundry Assets A/c Dr 900000
To Honda Ltd 900000
Honda Ltd Dr 900000
To Equity share Capital A/c 900000
(c)Sundry Assets A/c Dr 900000
To Honda Ltd 900000
Honda Ltd Dr 900000
To Bank A/c 900000
(d) None of the above
Answer
Answer: (b) Sundry Assets A/c Dr 900000
To Honda Ltd 900000
Honda Ltd Dr 900000
To Equity share Capital A/c 900000
Explanation: Number of shares issued = Purchase consideration /Value of per share
Number of shares issued = 900000/25
Number of shares issued = 36000
Entries:
Sundry Assets A/c Dr 900000
To Honda Ltd 900000
Honda Ltd Dr 900000
To Equity share Capital A/c 900000 ( 36000 X 25 )
13.MNC Ltd Purchased assets of Rs 325000 from SAM Ltd. MNC Ltd issued equity shares of Rs 5 each fully paid in consideration. Calculate the Total number of share to be issued by MNC Ltd
(a) 65000
(b) 1625000
(c) 325000
(d) None of the above
Answer
Answer: (a) 65000
Explanation: Number of shares issued = Purchase consideration /Value of per share
Number of shares issued = 325000/5
Number of shares issued = 65000 Shares
14.RS Ltd purchased assets of Rs 3000000 from SD Ltd. RS Ltd issued equity shares of Rs 200 each fully paid in consideration. Journal entries in the books of RS Ltd if the shares are issued at 50 % premium will be:
(a) Sundry Assets A/c Dr 3000000
To SD Ltd 3000000
SD Ltd Dr 3000000
To Equity share Capital A/c 2000000
To Security premium reserve A/c 1000000
(b) Sundry Assets A/c Dr 3000000
To SD Ltd 3000000
Bank A/c Dr 3000000
To Equity share Capital A/c 2950000
To Security premium reserve A/c 50000
(c) Sundry Assets A/c Dr 3000000
To SD Ltd 3000000
SD Ltd Dr 3000000
To Bank A/c 3000000
(d) None of the above
Answer
Answer: (a) Sundry Assets A/c Dr 3000000
To SD Ltd 3000000
SD Ltd Dr 3000000
To Equity share Capital A/c 2000000
To Security premium reserve A/c 1000000
Explanation: Number of shares issued = Purchase consideration /Value of per share
Number of shares issued = 3000000/300
Number of shares issued = 10000
Entries:
Sundry Assets A/c Dr 3000000
To SD Ltd 3000000
SD Ltd Dr 3000000
To Equity share Capital A/c 2000000 ( 10000 X 200 )
To Security premium reserve A/c 1000000 ( 10000 X 100 )
15.JK Ltd purchased assets of Rs 312000 from Fraud Ltd. JK Ltd issued equity shares of Rs 30 each fully paid in consideration. Calculate the Total number of share to be issued by JK Ltd if the shares are issued at 30 % premium.
(a) 10400
(b) 9900
(c) 2400
(d) 8000
Answer
Answer: (d) 8000
Explanation: Number of shares issued = Purchase consideration/ Value of per share
Number of shares issued = 312000/39
Number of shares issued = 8000
Accounting for Shares Class 12 MCQ
16.Ankit Ltd purchased a running business from Gem Ltd. The assets and liabilities consisted of the following : Land Rs 1200000 , Building Rs 100000 , Stock Rs 400000 and Bills payable Rs 350000. Journal entry for assets and liabilities taken over if Total purchase consideration of Rs 1300000 was discharged by issuing equity shares of Rs 100 each at par will be :
(a) Land A/c Dr 1200000
Building A/c Dr 100000
Stock A/c Dr 400000
To Bills payable A/c 350000
To Gem Ltd 1300000
To Cash A/c 50000
(b) Land A/c Dr 1200000
Building A/c Dr 100000
Stock A/c Dr 400000
To Bills payable A/c 350000
To Gem Ltd 1300000
To Cash Reserve A/c 50000
(c) Sundry Assets A/c Dr 1300000
To Gem Ltd 1300000
(d) None of the above
Answer
Answer: (b) Land A/c Dr 1200000
Building A/c Dr 100000
Stock A/c Dr 400000
To Bills payable A/c 350000
To Gem Ltd 1300000
To Cash Reserve A/c 50000
Explanation: Entry for assets and liabilities taken over and balance credited to capital reserve
Land A/c Dr 1200000
Building A/c Dr 100000
Stock A/c Dr 400000
To Bills payable A/c 350000
To Gem Ltd 1300000
To Capital Reserve A/c 50000
17.Ankit Ltd purchased a running business from Gem Ltd. The assets and liabilities consisted of the following : Land Rs 1200000 , Building Rs 100000 , Stock Rs 400000 and Bills payable Rs 350000. Calculate the amount credited to capital reserve if the Total purchase consideration of Rs 1300000 was discharged by Ankit Ltd
(a) 1700000
(b) 3350000
(c) 50000
(d) None of the above
Answer
Answer: (c) 50000
Explanation: Amount credited to capital reserve would be:
Land 1200000
Building 100000
Stock 400000
Total 1700000
Bills payable 350000
Gem Ltd 1300000
Total 1650000
Capital Reserve 1700000 (-) 1650000
= 50000
18.Hero Ltd purchased a running business from Honda Ltd .The assets and liabilities consisted of the following : Computers Rs 1400000 , Debtors Rs 700000 , Cash Rs 350000 and Loans Rs 650000. Journal entry for assets and liabilities taken over if purchase consideration of Rs 2000000 was discharged by issuing equity shares of Rs 100
(a) Computers A/c Dr 1400000
Debtors A/c Dr 700000
Cash A/c Dr 350000
Goodwill A/c Dr 200000
To Loans A/c 650000
To Honda Ltd 2000000
(b)Computers A/c Dr 1400000
Debtors A/c Dr 700000
Cash A/c Dr 350000
Suspense A/c Dr 200000
To Loans A/c 650000
To Honda Ltd 2000000
(c) Sundry Assets A/c Dr 2000000
To Honda Ltd 2000000
(d) None of the above
Answer
Answer: (a) Computers A/c Dr 1400000
Debtors A/c Dr 700000
Cash A/c Dr 350000
Goodwill A/c Dr 200000
To Loans A/c 650000
To Honda Ltd 2000000
Explanation: Entry for assets and liabilities taken over and balance debited to goodwill.
Computers A/c Dr 1400000
Debtors A/c Dr 700000
Cash A/c Dr 350000
Goodwill A/c Dr 200000
To Loans A/c 650000
To Honda Ltd 2000000
19.DK Ltd purchased a running business from KD Ltd. The assets and liabilities consisted of the following : Land Rs 100000 , Debtors Rs 225000 , Stock Rs 275000 and Creditors Rs 150000. Calculate the amount debited to goodwill if the Total purchase consideration of Rs 530000 was discharged by DK Ltd
(a) 600000
(b) 80000
(c) 400000
(d) None of the above
Answer
Answer: (b) 80000
Explanation: Entry for assets and liabilities taken over and balance debited to goodwill.
Land 100000
Debtors 225000
Stock 275000
Total 600000
Creditors 150000
DK Ltd 530000
Total 680000
Goodwill = 680000 (-) 600000
= 80000
20.King Ltd issued 12500 shares of Rs 20 each, credited as fully paid to the promoters for their services. Entries in the books for the issue of shares will be:
(a) Bank A/c Dr 250000
To Share Capital A/c 250000
(b) Formation Expenses A/c Dr 250000
To Share Capital A/c 250000
(c) Statement of profit and loss A/c Dr 250000
To Share Capital A/c 250000
(d) None of the above
Answer
Answer: (b) Formation Expenses A/c Dr 250000
To Share Capital A/c 250000
Explanation: Entry for recording issue of shares to promoters:
Formation Expenses A/c Dr 250000
To Share Capital A/c 250000 ( 12500 X 20 )
Accounting for Shares Class 12 MCQ
21.Ankur Ltd issued 8000 shares of Rs 10 each credited as fully paid to the underwriters for their services. Entries in the books to record the transaction will be:
(a) Underwriting(Commission) Expenses A/c Dr 80000
To Underwriters A/c 80000
Underwriters A/c Dr 80000
To Share capital A/c 80000
(b) Bank A/c Dr 80000
To Underwriters A/c 80000
Bank A/c Dr 80000
To Share capital A/c 80000
(c) Statement of profit and loss A/c Dr 80000
To Underwriters A/c 80000
Underwriters A/c Dr 80000
To Share capital A/c 80000
(d) None of the above
Answer
Answer: (a) Underwriting(Commission) Expenses A/c Dr 80000
To Underwriters A/c 80000
Underwriters A/c Dr 80000
To Share capital A/c 80000
Explanation: Entry for recording issue of shares to underwriters:
For making underwriting expenses due=
Underwriting(Commission) Expenses A/c Dr 80000
To Underwriters A/c 80000 ( 8000 X 10 )
For issuing shares to underwriters=
Underwriters A/c Dr 80000
To Share capital A/c 80000
22.Moonlight Ltd issued 4500 equity shares of Rs 10 each payable at Rs 6 on application, Rs 2 on allotment, Rs 1 on first call and the balance on final call. All the shares were fully subscribed and paid except of a shareholder having 400 shares who could not pay for the final call. Journal entry for final call money due and received in the books if calls in arrears account is maintained by the company will be:
(a) Equity share final call A/c Dr 4500
To Share capital A/c 4500
Bank A/c Dr 4100
To Equity share final call A/c 4100
(b) Equity share final call A/c Dr 4500
To Share capital A/c 4500
Bank A/c Dr 4500
To Equity share final call A/c 4500
(c) Equity share final call A/c Dr 4500
To Share capital A/c 4500
Bank A/c Dr 4100
Calls in arrears A/c Dr 400
To Equity share final call A/c 4500
(d) None of the above
Answer
Answer: (c) Equity share final call A/c Dr 4500
To Share capital A/c 4500
Bank A/c Dr 4100
Calls in arrears A/c Dr 400
To Equity share final call A/c 4500
Explanation: Entry for final call money due:
Equity share final call A/c Dr 4500
To Share capital A/c 4500 ( 4500 X 1 )
Entry for receiving final call money:
Bank A/c Dr 4100
Calls in arrears A/c Dr 400 ( 400 X 1 )
To Equity share final call A/c 4500
23.DK Ltd issued 12000 shares of Rs 10 each at par. Amount payable on the application Rs 5 per share , on allotment Rs 3 per share , on first call Rs 1 per share and on second call Rs 1 Per share. D was allotted 200 shares. If D failed to pay allotment money and his shares were forfeited after allotment. The necessary journal entry relating to the forfeiture of shares will be
(a) Share capital A/c Dr 1600
To Share allotment A/c 600
To Share forfeiture A/c 1000
(b) Share capital A/c Dr 1600
To Share allotment A/c 1600
(c) Share capital A/c Dr 1600
To Share allotment A/c 1000
To Share forfeiture A/c 600
(d) None of the above
Answer
Answer: (a) Share capital A/c Dr 1600
To Share allotment A/c 600
To Share forfeiture A/c 1000
Explanation: Entry for forfeiture of share
Share capital A/c Dr 1600 ( 200 X 8 ) Number of share forfeited X Called up value
To Share allotment A/c 600 ( 200 X 3 )
To Share forfeiture A/c 1000 ( 200 X 5 )
24.Arun Ltd issued 5000 shares of Rs 15 each at par. Amount payable on the application Rs 5 per share , on allotment Rs 4 per share , on first call Rs 4 per share and on second call Rs 2 Per share. Q was allotted 50 shares. If Q failed to pay allotment money and on his subsequent failure to pay the first call, his shares were forfeited. The necessary journal entry relating to the forfeiture of shares will be:
(a) Share capital A/c Dr 650
To Share allotment A/c 650
(b) Share capital A/c Dr 650
To Share allotment A/c 200
To Share first call A/c 200
To Share forfeiture A/c 250
(c) Share capital A/c Dr 650
To Share allotment A/c 250
To Share first call A/c 200
To Share forfeiture A/c 200
(d) None of the above
Answer
Answer: (b) Share capital A/c Dr 650
To Share allotment A/c 200
To Share first call A/c 200
To Share forfeiture A/c 250
Explanation: Entry for forfeiture of share:
Share capital A/c Dr 650 ( 50 X 13 )
[Number of share forfeited X Called up value]
To Share allotment A/c 200 ( 50 X 4 )
[Amount not paid on allotment]
To Share first call A/c 200 ( 50 X 4 )
[Amount not paid on first call]
To Share forfeiture A/c 250 ( 50 X 5 )
[Amount received on shares forfeited]
25.Heena Ltd issued 15000 shares of Rs 25 each at par. Amount payable on the application Rs 5 per share , on allotment Rs 6 per share , on first call Rs 10 per share and on second call Rs 4 Per share. P was allotted 100 shares. If P failed to pay allotment money and on his subsequent failure to pay the first call, his shares were forfeited. What will be the amount credited to the forfeiture account.
(a) 500
(b) 1100
(c) 2500
(d) None of the above
Answer
Answer: (a) 500
Explanation: Amount credited to the forfeiture account
Number of share forfeited X Amount paid
= 100 X 5
= 500
Accounting for Shares Class 12 MCQ
26.PNT Ltd issued 12000 shares of Rs 15 each at par. Amount payable on the application Rs 4 per share , on allotment Rs 3 per share , on first call Rs 6 per share and on final call Rs 2 Per share. W was allotted 50 shares. If W failed to pay first call and on his subsequent failure to pay the final call, his shares were forfeited after the final call. The necessary journal entry relating to the forfeiture of shares in the following case will be:
(a) Share capital A/c Dr 750
To Share first call A/c 750
(b) Share capital A/c Dr 750
To Share first call A/c 350
To Share final call A/c 100
To Share forfeiture A/c 300
(c)Share capital A/c Dr 750
To Share first call A/c 350
To Share final call A/c 100
To Share forfeiture A/c 350
(d) None of the above
Answer
Answer: (c)Share capital A/c Dr 750
To Share first call A/c 350
To Share final call A/c 100
To Share forfeiture A/c 350
Explanation: Entry for forfeiture of share:
Share capital A/c Dr 750 ( 50 X 15 )
[Number of share forfeited X Called up value]
To Share first call A/c 300 ( 50 X 6 )
[Amount not paid on first call]
To Share final call A/c 100 ( 50 X 2 )
[Amount not paid on final call]
To Share forfeiture A/c 350 ( 50 X 7 )
[Amount received on shares forfeited ( 4 + 3 )]
27.DD Ltd issued 60000 shares of Rs 30 each at par. Amount payable on the application Rs 10 per share , on allotment Rs 5 per share , on first call Rs 12 per share and on final call Rs 3 Per share. Jatin was allotted 80 shares. If Jatin failed to pay first call and on his subsequent failure to pay the final call, his shares were forfeited after the final call. What will be the amount credited to the forfeiture account?
(a) 1200
(b) 400
(c) 800
(d) None of the above
Answer
Answer: (a) 1200
Explanation: Amount credited to the forfeiture account =
Number of share forfeited X Amount paid Application money + Allotment money
= 80 X 15 ( 10 + 5 )
= 1200
28.JP Ltd issued 55000 shares of Rs 50 each at par. Amount payable on the application Rs 25 per share , on allotment Rs 10 per share , on first call Rs 8 per share and on final call Rs 7 Per share. Rohit was allotted 500 shares. If Rohit failed to pay first call and on his subsequent failure to pay the final call, his shares were forfeited after the final call. What will be the amount credited to the first call account?
(a) 4000
(b) 5000
(c) 12500
(d) None of the above
Answer
Answer: (a) 4000
Explanation: Amount credited to the first call account
= Number of share forfeited X Amount of first call
= 500 X 8
= 4000
29.KYC Ltd issued 9000 shares of Rs 5 each at par. Amount payable on the application Rs 1 per share , on allotment Rs 2 per share , on first call Rs 1 per share and on final call Rs 1 Per share. Arun was allotted 120 shares. If Arun failed to pay first call and on his subsequent failure to pay the final call, his shares were forfeited after the final call. What will be the amount credited to the final call account?
(a) 120
(b) 240
(c) 360
(d) None of the above
Answer
Answer: (a) 120
Explanation: Amount credited to the final call account
= Number of share forfeited X Amount of final call
= 120 X 1
= 120
30.DK Ltd issued 12000 shares of Rs 10 each at par. Amount payable on the application Rs 5 per share , on allotment Rs 3 per share , on first call Rs 1 per share and on second call Rs 1 Per share. D was allotted 200 shares . If D failed to pay allotment money and his shares were forfeited after allotment. What will be the amount credited to the forfeiture account?
(a) 1600
(b) 1000
(c) 600
(d) None of the above
Answer
Answer: (b) 1000
Explanation: Amount credited to the forfeiture account
= Number of share forfeited X Amount paid
= 200 X 5
= 1000
(**Amount paid is only application money)
Accounting for Shares Class 12 MCQ
31.PLC Ltd issued 2000 shares of Rs 5 each at par. Amount payable on the application Rs 1 per share , on allotment Rs 2 per share , on first call Rs 1 per share and on second call Rs 1 Per share. A was allotted 100 shares . If A failed to pay allotment money and his shares were forfeited after allotment. What will be the amount credited to the forfeiture account?
(a) 200
(b) 300
(c) 400
(d) 100
Answer
Answer: (d) 100
Explanation: Amount credited to the forfeiture account
= Number of share forfeited X Amount paid
= 100 X 1
= 100
(**Amount paid is only application money)
32.Best Ltd issued 25000 equity shares of Rs 5 each at par payable on the application Rs 1 per share , on allotment Rs 2 per share , on first call Rs 1 per share and on second call Rs 1 Per share. Raman was allotted 300 shares. The amount transferred to share forfeiture account will be: if Raman failed to pay second call money and his shares were forfeited after first call.
(a) 1200
(b) 900
(c) 1500
(d) None of the above
Answer
Answer: (a) 1200
Explanation: Amount transfer to share forfeiture account = Amount received on shares forfeited
Total money received on Raman s share = Number of shares X (Application money + Allotment money + First call money)
= 300 X ( 1 + 2 + 1 )
= 300 X 4
= 1200
33.JP Ltd issued 20000 equity shares of Rs 15 each at a premium of Rs 15 per share , Payable as Rs 10 per share on application , on allotment Rs 18 (including premium) and Rs 2 Per share on first and final call. Q was allotted 2000 shares failed to pay the first and final call and his shares were forfeited. Amount transfer to share forfeiture account will be :
(a) 56000
(b) 30000
(c) 26000
(d) None of the above
Answer
Answer: (c) 26000
Explanation: Amount transferred to share forfeiture account = Amount received on shares forfeited
Total money received on Q’s share = Number of shares X (Application money + Allotment money – Excluding premium received)
= 2000 X ( 10 + 3 )
= 2000 X 13
= 26000
34.Jio Ltd issued 15000 equity shares of Rs 50 each at a premium of Rs 10 per share , Payable as Rs 20 per share on application , on allotment Rs 25 (including premium) and Rs 15 Per share on first and final call. Ankit was alloted 1600 shares failed to pay the first and final call and his shares were forfeited. The entry to record shares forfeiture will be:
(a) Share capital A/c Dr 80000
To Share first and final call A/c 24000
To Share forfeiture A/c 56000
(b) Share capital A/c Dr 80000
To Share in arrear A/c 24000
To Share forfeiture A/c 56000
(c) Both (a) and (b) are correct
(d) None of the above
Answer
Answer: (c) Both (a) and (b) are correct
Explanation: Amount transferred to share forfeiture account = Amount received on shares forfeited
Total money received on Ankit s share = Number of shares X (Application money + Allotment money – Excluding premium received)
= 1600 X ( 20 + 15 )
= 1600 X 35
= 56000
( Number of shares forfeited X Called up value on shares)
Share capital A/c Dr 80000 ( 1600 X 50 )
To Share first and final call A/c 24000 ( 1600 X 15 )
To Share forfeiture A/c 56000
Or we can use call in arrear account also to pass the entry
Share capital A/c Dr 80000
To Calls in arrear A/c 24000
To Share forfeiture A/c 56000
35.H Ltd issued issued 35000 shares of Rs 30 each at a premium of Rs 10 per share , Payable as Rs 12 per share on application, on allotment Rs 20 (including premium) Rs 8 Per share on first and final call. Ramesh was allotted 700 shares failed to pay the allotment and final call money and his shares were forfeited. The entry to record shares forfeiture will be:
(a) Share capital A/c Dr 21000
Security premium reserve A/c Dr 7000
To Share allotment A/c 14000
To Share first and final call A/c 5600
To Share forfeiture A/c 8400
(b) Share capital A/c Dr 21000
Security premium reserve A/c Dr 7000
To Calls in arrears A/c 19600
To Share forfeiture A/c 8400
(c) Both (a) and (b) are correct
(d) None of the above
Answer
Answer: (c) Both (a) and (b) are correct
Explanation: Amount transferred to share forfeiture account = Amount received on shares forfeited
Total money received on Ramesh s share = Number of shares X (Application money )
= 700 X 12
= 700 X 12
= 8400
( Number of shares forfeited X Called up value on shares)
Share capital A/c Dr 21000 ( 700 X 30 )
Security premium reserve A/c Dr 7000 ( 700 X 10 )
To Share allotment A/c 14000 ( 700 X 20 )
To Share first and final call A/c 5600 ( 700 X 8 )
To Share forfeiture A/c 8400
Or we can use call in arrears account also to pass the entry
Share capital A/c Dr 21000
Security premium reserve A/c Dr 7000
To Calls in arrears A/c 19600 ( 14000 + 5600 )
To Share forfeiture A/c 8400
Accounting for Shares Class 12 MCQ
36.Key Ltd which was allotted 1000 equity shares of Rs 30 each by a company, failed to pay the final call of Rs 8 per share .These shares were forfeited and re-issued to DK Ltd at Rs 30 each. Entry for forfeiture and re-issue in the books will be:
(a) Equity Share capital A/c Dr 30000
To Equity share final call A/c 8000
To Equity Share forfeiture A/c 22000
Bank A/c Dr 30000
To Equity Share capital A/c 30000
(b) Equity Share capital A/c Dr 8000
To Equity share final call A/c 8000
Bank A/c Dr 30000
To Equity Share capital A/c 30000
(c) Either (a) or (b)
(d) None of the above
Answer
Answer: (a) Equity Share capital A/c Dr 30000
To Equity share final call A/c 8000
To Equity Share forfeiture A/c 22000
Bank A/c Dr 30000
To Equity Share capital A/c 30000
Explanation: Entry for shares forfeiture
Equity Share capital A/c Dr 30000 ( 1000 X 30 )
To Equity share final call A/c 8000 ( 1000 X 8 )
To Equity Share forfeiture A/c 22000 ( 1000 X 22 )
Entry for Re-issue of shares
Bank A/c Dr 30000 ( 1000 X 30 )
To Equity Share capital A/c 30000
37.Anshu who was allotted 175 equity shares of Rs 20 each by a company, failed to pay the final call of Rs 8 per share .These shares were forfeited and re-issued to Sapna at Rs 20. Amount transferred to capital reserve account will be:
(a) 3500
(b) 2100
(c) 1400
(d) None of the above
Answer
Answer: (b) 2100
Explanation: Amount forfeited on Anshu s share = 175 X 12
= 2100 Amount transferred to capital reserve
When forfeited shares are re-issued at par or premium, the whole of the amount forfeited on such shares is a capital profit and is transferred to capital reserve account.
38.Raju who was allotted 50 equity shares of Rs 20 each by a company, failed to pay the final call of Rs 5 per share. These shares were forfeited and out of these 30 shares were re-issued to Sapna at Rs 20. Amount transferred to capital reserve account will be:
(a) 750
(b) 250
(c) 450
(d) None of the above
Answer
Answer: (c) 450
Explanation: Total amount forfeited on Raju s shares = 50 X 15
= 750
Number of shares re-issued = 30
Amount transferred to capital reserve = Amount forfeited on shares re-issued – Discount on issue of shares if any
Amount forfeited on 30 shares = 30 X 15 – 0
= 450
39.Jatin who was allotted 500 Preference shares of Rs 50 each by a company, failed to pay the final call of Rs 15 per share. These shares were forfeited and out of these 375 shares were re-issued to Saurabh at Rs 50. Journal entry for transferring amount to capital reserve will be:
(a) Forfeited shares A/c Dr 17500
To Capital Reserve A/c 17500
(b) Forfeited shares A/c Dr 13125
To Capital Reserve A/c 13125
(c) Forfeited shares A/c Dr 25000
To Capital Reserve A/c 25000
(d) None of the above
Answer
Answer: (b) Forfeited shares A/c Dr 13125
To Capital Reserve A/c 13125
Explanation: Total amount forfeited on Jatin s shares = 500 X 35
= 17500
Number of shares re-issued = 375
Amount transferred to capital reserve = Amount forfeited on shares re-issued – Discount on issue of shares if any
Amount forfeited on 375 shares = 375 X 35 – 0
= 13125
Forfeited shares A/c Dr 13125
To Capital Reserve A/c 13125
40.Manjeet who was allotted 350 equity shares of Rs 15 each by a company, failed to pay the final call of Rs 1 per share. These shares were forfeited and out of these 300 shares were re-issued to Suman at Rs 10 per shares fully paid up. Amount transferred to capital reserve account will be:
(a) 4200
(b) 2700
(c) 4900
(d) None of the above
Answer
Answer: (b) 2700
Explanation: Total amount forfeited on Manjeet s shares = 350 X 14
= 4900
Number of shares re-issued = 300
Amount transferred to capital reserve = Amount forfeited on shares re-issued – Discount on issue of shares if any
Amount forfeited on 300 shares = ( 300 X 14 ) – ( 300 X 5 )
= 4200 – 1500
= 2700
Accounting for Shares Class 12 MCQ
41.Jyoti who was allotted 250 equity shares of Rs 15 each by a company, failed to pay the final call of Rs 3 per share .These shares were forfeited and out of these 100 shares were re-issued to Yatish at Rs 10 per shares fully paid up. Journal entry for shares re-issued will be:
(a) Bank A/c Dr 1000
Discount A/c Dr 500
To share capital A/c 1500
(b) Bank A/c Dr 1000
To share capital A/c 1000
(c) Bank A/c Dr 1000
Forfeited share A/c Dr 500
To share capital A/c 1500
(d) None of the above
Answer
Answer: (c) Bank A/c Dr 1000
Forfeited share A/c Dr 500
To share capital A/c 1500
Explanation: Total amount forfeited on Jyoti s shares = 250 X 12
= 3000
Number of shares re-issued = 100
Amount transferred to capital reserve = Amount forfeited on shares re-issued – Discount on issue of shares if any
Amount forfeited on 100 shares = ( 100 X 12 ) – ( 100 X 5 )
= 1200 – 500
= 700
Entry for re-issue of shares
Bank A/c Dr 1000 ( 100 X 10 )
Forfeited share A/c Dr 500 ( 100 X 5 )
To share capital A/c 1500 ( 100 X 15 )
42.On 1st April 2016 A company issued shares and a shareholder Rekha who was allotted 2500 shares of Rs 100 each by the company, failed to pay the final call of Rs 25 per share. These shares were forfeited and out of these 1000 shares were re-issued to Sheela at Rs 110 per shares fully paid up. Journal entry for shares re-issued and capital reserve will be:
(a) Bank A/c Dr 110000
To share capital A/c 100000
To Profit and loss A/c 10000
Share forfeiture A/c Dr 187500
To Capital Reserve A/c 187500
(b) Bank A/c Dr 110000
To share capital A/c 100000
To Security premium reserve A/c 10000
Share forfeiture A/c Dr 75000
To Capital Reserve A/c 75000
(c) Bank A/c Dr 110000
To share capital A/c 110000
Share forfeiture A/c Dr 187500
To Capital Reserve A/c 187500
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 110000
To share capital A/c 100000
To Security premium reserve A/c 10000
Share forfeiture A/c Dr 75000
To Capital Reserve A/c 75000
Explanation: Total amount forfeited on Rekha s shares = 2500 X 75
= 187500
Number of shares re-issued = 1000
Amount transferred to capital reserve = Amount forfeited on shares re-issued – Discount on issue of shares if any
Amount forfeited on 1000 shares = ( 1000 X 75 ) – 0
= 75000 – 0
= 75000 This whole amount will be transferred to capital reserve account.
When forfeited shares are re-issued at par or premium, the whole of the amount forfeited on such shares is a capital profit and is transferred to capital reserve account.
Entry for re-issue of shares
Bank A/c Dr 110000 ( 1000 X 110 )
To share capital A/c 100000 ( 1000 X 100 )
To Security premium reserve A/c 10000 ( 1000 X 10 )
Entry for capital reserve
Share forfeiture A/c Dr 75000
To Capital Reserve A/c 75000
43.GST Ltd invited applications for issuing 20000 Preference shares of Rs 10 each at a premium of Rs 5 per share. The payable as – Rs 9 Per share on application and allotment(including premium) and balance on first and final call. Application for 80000 shares were received. Application for 40000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 300 shares applied by Manoj. His shares were forfeited. The forfeited shares were re-issued at a discount of Rs 3 Per share. Number of shares allotted to Manoj were:
(a) 550
(b) 500
(c) 150
(d) None of the above
Answer
Answer: (c) 150
Explanation: Calculation of total numbers of shares allotted to Manoj = (Total shares allotted under pro−rata category /Total shares applied pro−rata category) X Number of shares applied by the shareholder
= (20000/80000−40000) X 300
= (20000/40000) X 300
= 150
44.FMCG Ltd invited applications for issuing 90000 equity shares of Rs 10 each at a premium of Rs 5 per share. The payable as – Rs 9 Per share on application and allotment (including premium) and balance on first and final call. Application for 100000 shares were received. Application for 10000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 1000 issued to Mamta. Her shares were forfeited. The forfeited shares were re-issued at a discount of Rs 4 Per share. Number of shares applied by Mamta were:
(a) 1400
(b) 1350
(c) 1000
(d) None of these
Answer
Answer: (c) 1000
Explanation: Calculation of total numbers of shares applied by Mamta = (Total shares applied under pro−rata category/Total shares allotted pro−rata category) X Number of shares allotted by the company to shareholder
= (100000−10000/90000) X 1000
= (90000/90000) X 1000
= 1000