Issue Of Shares

SEBI requires at least 90% of the issued capital to be subscribed for valid allotment. This protects investors and ensures financial viability of the issue. Final Answer: Issued

According to Rule 10 of Companies (Miscellaneous) Rules, 2014, the maximum number of partners in a firm is prescribed by the Central Government as 50. Hence both the assertion and reason are correct, and the reason correctly explains the assertion.
Final Answer: Both Assertion (A) and Reason (R) are true and (R) explains (A).

1. Share Capital A/c Dr. ₹ 8,000
Securities Premium A/c Dr. ₹ 2,000
To Share Forfeiture A/c ₹ 4,000
To Share Allotment A/c ₹ 6,000
(Being forfeiture of 1,000 shares)
2. Bank A/c Dr. ₹ 5,600
To Share Capital A/c ₹ 6,400
To Securities Premium A/c ₹ 1,600
To Share Forfeiture A/c ₹ 600
(Being 800 shares reissued at ₹ 7 fully paid up)
Calculation of loss on reissue:
Face value reissued = 800 × ₹ 8 = ₹ 6,400
Amount received = 800 × ₹ 7 = ₹ 5,600
Loss on reissue = ₹ 800
Adjusted from forfeiture = ₹ 4,000 × (800/1000) = ₹ 3,200
Balance after adjustment = ₹ 3,200 – ₹ 600 = ₹ 2,600 transferred to Capital Reserve.
3. Share Forfeiture A/c Dr. ₹ 2,600
To Capital Reserve A/c ₹ 2,600
(Being profit on reissue transferred to Capital Reserve)

Issued capital as at 31-03-2023 = ₹ 50,00,000
Issued capital as at 31-03-2024 = ₹ 60,00,000
Increase in issued capital = ₹ 10,00,000
Face value per share = ₹ 10
Number of new shares issued = ₹ 10,00,000 ÷ ₹ 10 = 1,00,000 shares
Total face value = 1,00,000 × ₹ 10 = ₹ 10,00,000

1. Bank A/c Dr. ₹ 13,50,000
To Equity Share Application A/c ₹ 13,50,000
(Being application money received on 1,50,000 shares @ ₹ 9 per share)
2. Equity Share Application A/c Dr. ₹ 13,50,000
To Share Capital A/c ₹ 4,20,000
To Securities Premium A/c ₹ 2,80,000
To Equity Share Allotment A/c ₹ 5,60,000
To Calls in Advance A/c ₹ 80,000
(Being application money adjusted towards capital, premium, allotment, and calls in advance)
Calculation details:
Total shares allotted = 1,00,000
Application money required = 1,00,000 × ₹ 9 = ₹ 9,00,000
Excess application = ₹ 13,50,000 – ₹ 9,00,000 = ₹ 4,50,000
Allocation towards allotment = 70,000 × ₹ 8 = ₹ 5,60,000
3. Equity Share Allotment A/c Dr. ₹ 8,00,000
To Share Capital A/c ₹ 4,00,000
To Securities Premium A/c ₹ 4,00,000
(Being allotment due on 1,00,000 shares @ ₹ 8 each)
4. Bank A/c Dr. ₹ 2,40,000
To Equity Share Allotment A/c ₹ 2,40,000
(Being balance of allotment received after adjusting excess application money)
5. Equity Share First and Final Call A/c Dr. ₹ 3,00,000
To Share Capital A/c ₹ 3,00,000
(Being call due @ ₹ 3 per share on 1,00,000 shares)
6. Bank A/c Dr. ₹ 2,96,400
Calls in Arrears A/c Dr. ₹ 3,600
To Equity Share First and Final Call A/c ₹ 3,00,000
(Being call money received except on Shekhar’s 1,200 shares)
Calculation of arrears:
Shekhar defaulted on 1,200 × ₹ 3 = ₹ 3,600

1. Share Capital A/c Dr. ₹ 4,200
Securities Premium A/c Dr. ₹ 1,800
To Share Forfeiture A/c ₹ 3,000
To Share Allotment A/c ₹ 3,000
(Being forfeiture of 600 shares for non-payment of allotment)
2. Bank A/c Dr. ₹ 7,800
To Share Capital A/c ₹ 6,000
To Securities Premium A/c ₹ 1,800
(Being reissue of 600 shares at ₹ 13 fully paid up)
3. Share Forfeiture A/c Dr. ₹ 300
To Capital Reserve A/c ₹ 300
(Being profit on reissue transferred to Capital Reserve)
Calculation of profit on reissue:
Total received on reissue = ₹ 7,800
Less Face value = ₹ 6,000 + premium ₹ 1,800 = ₹ 7,800
No gain/loss, so surplus from forfeiture ₹ 300 transferred.