Issue of Shares: Problems and Solutions | India | Accounting

Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. 

Problem 1 (Issue of Shares at Par—Journal, Cash Book and Balance Sheet):


A Limited Company issued 25,000 Ordinary Shares of Rs. 25 each payable Rs. 5 on application, Rs. 10 on allotment and Rs. 5 each on subsequent calls, 20,000 shares were fully- subscribed and moneys duly received. You are required to give journal entries, Cash Book and Balance Sheet of the company.

Problem 2 (Over subscription, calls-in-advance and calls-in-arrears):

X Ltd. makes an issue of 20,000 Equity Shares of Rs.10 each at Rs. 11 on 1st March payable as follows:

Rs. 2 on Application


Rs. 3 on allotment

Rs. 6 on First and Final Call (3 months after allotment)

Applications were received for 26,000 shares. The Directors made the allotment in fill to the Application demanding 10 or more shares and returned money to the applicants for 6,000 shares.

One shareholder who was allotted 40 shares paid the first and final call money along-with allotment money and an another shareholder who was allotted 60 shares did not pay allotment interest money but paid along-with first and final call money. The Directors deeded to change and allow interest, as the case may be, on calls-.n-advance and calls-in-arrears.


Give journal entries in the books of the company.



Problem 3:

X Co. Ltd. forfeited 100 shares of Rs. 10 each fully called up, held by Mr. Arun for non­payment of allotment money of Rs. 3 per share and first and final call of Rs. 4 per share. He paid application money @ Rs. 3 per share. These shares were reissued @ Rs. 9 per share as fully paid.

Pass forfeiture and reissue journal entries. 

Problem 4: 

Glamour Limited invited applications for 15,000 shares of Rs. 10 each issued at Rs. 11.50 payable as follows:

On application 1st July Rs. 7.50 per share

On allotment on 31st July Rs. 2.00 per share

On First and Final Call on 31st Aug. Rs. 2.00 per share

Applications were received for 18,000 shares and it was decided to deal the same as follows in arrangement with Stock Exchange authorities:

(a) To refuse allotment to applicants for 800 shares

(b) To give full allotment to applicants for 2,200 shares

(c) To allot the remaining shares pro-rata among other applicants

(d) To utilise the surplus received on application in part payment of amounts due on allotment. An applicant to whom 40 shares were allotted, failed to pay the amount due on the First and final Call and his shares were forfeited on 31st Oct. These shares were reissued on 5th Nov. as fully paid at Rs. 9 per share.

Give journal entries including those relating to cash to record the above transactions.


Problem 5: 

A Company made an issue of 10,000 shares of Rs. 10 each, payable Rs. 3 on application; Rs. 4 on allotment and balance on call. 43,825 shares were applied for, including an application for 300 shares from a person who paid for the full face value of the shares. Owing to over­subscription, allotments were scaled down as follows:

Applicants for 11,825 shares (in respect of applications for 500 or less) received 5,750 shares (including the applicant for 300 shares who got 150 shares).

Applicants for 32,000 shares (in respect of applications for over 500 shares) received 4,250 shares.

The amounts received were first applied towards allotment and call moneys, after satisfying that amount due on application and any balance left was returned.

You are required to show the Cash Book and Ledger Accounts to record the above transactions.



Problem 6:

Ram Co. Ltd. issued 1, 00,000 shares of Rs. 20 each on which the amount payable is as follows:

Rs. 5 on Application,

Rs. 4 on allotment,

Rs. 3 on First Call,

Rs. 5 on Second Call

Rs. 3 on Third and Final Call

From the following particulars, journalise the transactions for third call, forfeiture and reissue of shares:

The Company made the third call in August. Call money was received in full, except from the above persons. The Directors then forfeited these shares and reissued 1,000 shares, as fully paid, for Rs. 22 per share. This 1,000 shares included the shares of John and George.


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