CBSE Class 12

TS Grewal Accountancy Class 12 Solutions Chapter 8 Accounting for Share Capital are part of TS Grewal Accountancy Class 12 Solutions. Here we have given TS Grewal Accountancy Class 12 Solutions Chapter 8 Accounting for Share Capital.

TS Grewal Accountancy Class 12 Solutions Chapter 8 Accounting for Share Capital

Question 1.
Gopal Ltd. was registered with an authorised capital of ₹ 50,00,000 divided into Equity Shares of ₹ 100 each. The company offered for public subscription all the shares. Public applied for 45,000 shares and allotment was made to all the applicants. All the calls were made and were duly received except the final call of ₹ 20 per share on 500 shares.
Prepare the Balance Sheet of the company showing the different types of share capital.
Solution:

Question 2.
Himmat Ltd has authorised share capital of ₹ 50,00,000 divided into 5,00,000 Equity Shares of ₹ 10 each. It has existing issued and paid up capital of ₹ 5,00,000. It further issued to public 1,50,000 Equity Shares at par for subscription payable as under:

The issue was fully subscribed and allotment was made to all the applicants. Call was made during the year and was duly received.
Show share capital of the company in the Balance Sheet of the Company.
Solution:

Question 3.
Lennova Ltd. has authorised share capital of ₹ 1,00,00,000 divided into 1,00,000 Equity Shares of ₹ 100 each. It has existing issued and paid up capital of ₹ 25,00,000. It further issued to public 25,000 Equity Shares at a premium of 20% for subscription payable as under:
On Application: ₹ 30
On Allotment: ₹ 60 and
On Call: Balance Amount.
The issue was fully subscribed and allotment was made to all the applicants. The company did not make the call during the year.
Show share capital of the company in the Balance Sheet of the Company.
Solution:

Question 4.
A company issued 2,50,000 Equity Shares of ₹ 10 each to public. All amounts have been received in lump sum. Pass necessary journal entries in the books of the company.
Solution:

Question 5.
The authorised capital of ₹ 16,00,000 of XYZ Ltd. is divide into 1,60,000 Equity Shares of ₹ 10 each. Out of these shares 80,000 Equity Shares were issued at par to public for subscription. The full nominal value is payable on application. All the shares were subscribed by the public and total amount was paid for Pass necessary journal entries in the books of the company.
Solution:

Question 6.
XYZ Ltd. invited applications for 10,000 shares of ₹ 100 each payable as follows:
₹ 20 on application, ₹ 30 on allotment, ₹ 20 on first call and the balance on final call.
All the shares were applied and allotted. All the money was duly received.
You are required to journalise these transactions.
Solution:

Question 7.
Marigold Ltd. was registered with the authorized capital of ₹ 3,00,000 divided into 3,000 shares of ₹ 100 each, which were offered to the public Amount payable as ₹ 30 per share on application, ₹ 40 per share on allotment and ₹ 30 per share on first and final call. These shares were fully subscribed and all money was dully received. Prepare journal and Cash Book.
Solution:

Question 8.
A company was registered with an authorised capital of ₹ 10,00,000 divided into 7,500 Equity Shares of ₹ 100 each and, 2,500 Preference Shares of ₹ 100 each. 1,000 Equity and 500; 9% Preference Shares were offered to public on the following terms-
Equity Shares payable
₹ 10 on application, ₹ 40 on allotment and the balance in two calls of ₹ 25 each. Preference Shares are payable ₹ 25 on application, ₹ 25 on allotment and ₹ 50 on first and final call. All the shares were applied for and allotted. Amount due was duly received. Prepare Cash Book and pass necessary journal entries to record the above issue of shares and show how the Share Capital will appear in the Balance Sheet.
Solution:

Question 9.
Shiva Ltd. issued 1,00,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share. The whole amount was payable on application. The issue was fully subscribed. Pass necessary Journal entries.
Solution:

Question 10.
A limited company offered for subscription 10,000 shares of ₹ 25 each, payable ₹ 5 per share on application, ₹ 10 per share on allotment (including ₹ 5 per share as premium), ₹ 5 per share as first call on the shares and the balance in two equal amounts at intervals of three months. All the shares were applied for and allotted. All the money was received except the second call and final call on 200 and 400 shares respectively.
You are asked to show the entries in the company’s Journal, Cash Book and the ledger. Also show the company’s Balance Sheet oncompletion of the above transaction.
Solution:

Question 11.
X Ltd. was incorporated with a capital of ₹ 2,00,000 divided into shares of ₹ 10 each. 2,000 shares were offered to the public and out of these 1,800 shares were applied for and allotted ₹ 3 per share (including ₹ 1 premium) was payable on application, ₹ 4 per share (including ₹ 1 premium) on allotment, ₹ 2 per share on first call and ₹ 3 per share on final call. All the money was received. Give necessary journal entries and the Balance Sheet.
Solution:

Question 12.
Authorized capital of Suhani Ltd. is ₹ 45,00,000 divided into 30,000 shares of ₹ 150 each. Out of these company issued 15,000 shares of ₹ 150 each at a premium of ₹ 10 per share. the amount was payable as follows:
₹ 50 per share on application, ₹ 40 per share on allotment (including premium), ₹ 30 per share on firs t call and balance on final call. Public applied for 14,000 shares. All the money was duly received .
Prepare an extract of Balance Sheet of Suhani Ltd . as per Schedule III, Part I of the companies Act, 2013 disclosing the above information. Also prepare Notes to Accounts for the same.
Solution:

Question 13.
SRCC Ltd. was registered with a capital of ₹ 25,00,000 in shares of ₹ 10 each. It issued a prospectus inviting applications for 25,000 shares at 40% premium payable as follows:
On application ₹ 5 (including ₹ 1 premium), on Allotment ₹ 4 (including ₹ 1 premium), on first call ₹ 3 (including ₹ 1 premium), on second and final call ₹ 2 (including ₹ 1 premium).
Applications were received for 25,000 shares. All money was duly received. Pass the necessary Journal entries.
Solution:

Question 14.
X Ltd. invited application for 10,000 Equity Shares of ₹ 10 each issued at per The amount was payable on application. The issue was oversubscribed by 2,000 shares and allotment was made on pro rata basis. Pass necessary Journal entries.
Solution:

Question 15.
Citizen Watches Ltd. invited applications for 50,000 shares of ₹ 10 each payable ₹ 3 on application, ₹ 4 on allotment and balance on first and final call . Applications were received for 60,000 shares. Applications were accepted for 50,000 shares and remaining applications were rejected. All calls were made and received except First and Final call on 500 shares.
Pass the journal entries in the books of Citizen Watches Ltd .
Solution:

Question 16.
ABC Company Ltd.offered for subscription 20,000 shares of ₹ 10 each payable ₹ 3 on application and ₹ 5 on allotment for each share. Applications were received for 30,000 shares. Letters of regret were issued to applicants for 5,000 shares and their application money was refunded.
Application money for other 5,000 shares was applied towards the payment for allotment money. The balance of allotment money was also received in due time.
You are to prepare the journal, Cash Book, Ledger Accounts and the Balance Sheet of the company.
Solution:

Question 17.
Eastern Company Limited having an authorised capital of ₹ 10,00,000 divided into shares of ₹ 10 each, issued 50,000 shares at a premium of ₹ 3 per share payable as follows:

Applications were received for 60,000 shares and the directors allotted the shares as follows:
(i) Applicants for 40,000 shares received in full.
(ii) Applicants for 15,000 shares received an allotment of 8,000 shares.
(iii) Applicants for 5,000 shares received 2,000 shares on allotment, excess money being returned.
All amounts due on allotment were received.
The first call was made and the money was received except on 100 shares.
Give journal and cash book entries to record these transactions of the company. Also prepare the Balance Sheet of the company.
Solution:

Question 18.
X company issued ₹ 10,00,000 shares for subscription of ₹ 100 each at a premium of ₹ 20 per share payable as:
₹ 10 per share on application,
₹ 40 per share and ₹ 10 premium on allotment, and
₹ 50 per share and ₹ 10 premium on final payment.
Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received.
Pass necessary entries in the company’s books to record the above transactions. Also, prepare company’s Balance Sheet on completion of the above transactions.
Solution:

Question 19.
Sugandh Ltd. issued 60,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as ₹ 3 on application, ₹ 5(including premium) on allotment and the balance on first and final call. Applications were received for 92,000 shares. The Directors resolved to allot as:

Mohan, who had applied for 800 shares in Category
(i) and Sohan, who was allotted 600 shares in Category
(ii) failed to pay the allotment money. Calculate amount received on allotment.
Solution:

Question 20.
Sony Media Ltd.issued 50,000 shares of ₹ 10 each payable ₹ 3 on application, ₹ 4 on allotment and balance on first and final call. Applications were received for 1,00,000 shares and allotment was made as follows:
(i) Applicants for 60,000 shares were allotted 30,000 shares,
(ii) Applicants for 40,000 shares were allotted 20,000 shares,
Anupam to whom 1,000 shares were allotted from category
(i) failed to pay the allotment money.
Pass journal entries up to allotment.
Solution:

Question 21.
The Kalyan Cotton Mills Ltd.was registered on 1st January, 2011 with a capital of ₹10,00,000 divided into 1,00,000 shares of ₹ 10 each. The company issued 42,000 shares of which 40,000 shares were taken up by the public and ₹ 1 per share was received with application. On 1st February, these shares were allotted and ₹ 2 per share was duly received on 28th February as allotment money. A first call of ₹ 3 per share was made on 1st March and the call money on all shares with the exception of 100 shares was received. The final call of ₹ 4 per share was made on 1st June and the amount due, with the exception of 400 shares was received by 30th June. Pass necessary journal ands Cash Book entries and prepare the Balance Sheet as at 30th June, 2011.
Solution:

Question 22.
Ghosh Ltd. made the second and final call on its 50,000 Equity Shares @ ₹ 2 per share on 1st January, 2016. The entire amount was received on 15th January, 2016 except on 100 shares allotted to Venkat. Pass necessary journal entries for the call money due and received by opening Calls-in-Arrears Account.
Solution:

Question 23.
A Ltd was registered with a capital of ₹ 5,00,000 in shares of ₹ 10 each and issued 20,000 such shares at a premium of ₹ 2 per share payable as ₹ 2 per share on application, ₹ 5 per share on allotment (including premium) and ₹ 2 per share on first call made three months later. All the money payable on application and allotment was duly received but when the first call was made, one shareholder paid the entire balance on his holding of 300 shares and another shareholder holding 1,000 shares failed to pay the first call money.
Pass journal entries to record the above transactions and show how they will appear in the company’s Balance Sheet.
Solution:

Question 24.
XYZ Ltd.issued 8,000 Equity Shares of ₹ 10 each. ₹ 5 per share was called, payable ₹ 2 on application, ₹ 1 on allotment, ₹ 1 on first call and ₹ 1 on second call. All the money was duly received with the following exceptions:
A who holds 250 shares paid nothing after application.
B who holds 500 shares paid nothing after allotment.
C who holds 1,250 shares paid nothing after first call.
Prepare journal and the Balance Sheet.
Solution:

Question 25.
Bharat Ltd made the first call of ₹ 2 per share on its 1,00,000 Equity Shares on 1st March, 2006. Ashok, a shareholder, holding 800 shares paid the second and final call amount along with the first call money. The second and final call amount was ₹ 3 per share. Pass necessary journal entries for recording the above using the Calls-in Advance Account.
Solution:

Question 26.
2,000 Equity Shares of ₹ 10 each were issued to Limited from whom assets of ₹ 25,000 were acquired. Pass Journal entry.
Solution:

Question 27.
A limited company issued 800 Equity Shares of ₹ 100 each at a premium of 25% as fully paid-up in consideration of the purchase of plant and machinery of ₹ 1,00,000. Pass entries in company’s journal.
Solution:

Question 28.
Rajan Ltd. purchased assets from Geeta & Co. for ₹ 5,00,000. A sum of ₹ 1,00,000 was paid by means of a bank draft and for the balance due Rajan Ltd. issued equity Shares of ₹ 10 each at a premium of 25%. journalise the above transactions in the books of the company.
Solution:

Question 29.
Z Ltd. purchased furniture costing ₹ 2,20,000 from C.D Ltd. The payment was to be made by issue of 9% Preference Shares of ₹ 100 each at a premium of ₹ 10 per share. Pass necessary Journal entries in the books of Z Ltd.
Solution:

Question 30.
Goodluck Ltd purchased machinery costing ₹ 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity Shares of ₹ 10 each at a premium of 25%. Pass necessary Journal entries for the above transactions in the books of Goodluck Ltd.
Solution:

Question 31.
Jain Ltd purchased machinery costing ₹ 10,00,000 from Ayer Ltd. 50% of the payment was made by cheque and for the remaining 50%, the company issued Equity Shares of ₹ 100 each at a premium of 25%. Pass necessary Journal entries in the books of Jain Ltd. for the above transaction.
Solution:

Question 32.
Sona Ltd. purchased machinery costing ₹ 17,00,000 from Mona Ltd. Sona Ltd. paid 20% of the amount by cheque and for the balance amount issued Equity Shares of ₹ 100 each at a premium of 25%. Pass necessary Journal entries for the above transactions in the books of Sona Ltd .Show your working notes clearly.
Solution:

Question 33.
Light Lamps Ltd. issued 50,000 shares of ₹ 10 each as fully paid-up to the promoters for their services to set-up the company. It also issued 2,000 shares of ₹ 10 each credited as fully paid-up to the underwriters of shares for their services. journalise these transactions.
Solution:

Question 34.
Better Prospect Ltd. acquired land costing ₹ 1,00,000 and in payment allotted 1,000 Equity Shares of ₹ 100 each as fully paid. Further, the company issued 4,000 Equity Shares to public. The shares were payable as: ₹ 30 on application; ₹ 30 on allotment; ₹ 40 on first and final call.
Applications were received for all shares which were allotted. All the money was received except the call on 200 shares.
Pass journal entries and prepare Balance Sheet of the company.
Solution:

Question 35.
A company issued 30,000 fully paid-up shares of ₹ 100 each for purchase of the following assets and liabilities from Sharma Co:

You are required to pass necessary journal entries.
Solution:

Question 36.
A company purchased a running business from M/s. Rai Brothers for a sum of ₹ 15,00,000 payable ₹ 12,00,000 in fully paid shares of ₹ 10 each and balance through cheque.
The assets and liabilities consisted of the following:

You are required to pass necessary journal entries in the company’s books.
Solution:

Question 37.
Sandesh Ltd. took over the assets of ₹ 7,00,000 and liabilities of ₹ 2,00,000 from Sanchar Ltd. for a purchase consideration of ₹ 4,59,500. ₹ 8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of ₹ 10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.
Solution:

Question 38.
Z Ltd. issued 20,000 Equity Shares of ₹ 10 each at par payable: On application ₹ 2 per share; on allotment ₹ 3 per share; on first call ₹ 3 per share; on second and final call ₹ 2 per share.
Mr Gupta was allotted 100 shares. Pass necessary journal entry relating to the forfeiture of shares in each of the following alternative cases:
Case I: If Mr Gupta failed to pay the allotment money and his shares were forfeited.
Case II: If Mr Gupta failed to pay allotment money and on his subsequent failure to pay the first call his shares were forfeited.
Case III: If Mr Gupta failed to pay the first call and on his subsequent failure to pay the second and final call, his shares were forfeited.
Solution:

Question 39.
A Co Ltd. was registered with a nominal capital of ₹ 1,00,000 in Equity Shares of ₹ 10 each. It offered to the public 6,000 shares for subscription. The applications were received for 8,000 shares. The Directors rejected applications for 1,000 shares and returned the money received thereon. The application money received on the other 1,000 shares was adjusted towards allotment money. The amount payable on shares was: ₹ 2 per share on application, ₹ 4 per share on allotment and the balance on first call. One shareholders holding 100 shares failed to pay the first call money and as a result his shares were forfeited.
Pass necessary journal entries and prepare Cash Book to record the above transactions.
Solution:

Question 40.
U.P. Sugar Works Ltd. was registered on 1st January, 2014 with an authorised capital of ₹ 15,00,000 divided into 15,000 shares of ₹ 100 each. The company issued on 1st April, 2014, 5,000 shares of ₹ 100 each at a premium of ₹ 5 per share payable ₹ 25 per share on application, ₹ 30(including premium) on allotment and the balance in two equal installments of ₹ 25 each on 1st July ad 1st October respectively. All the allotments and call moneys were paid when due except in case of one shareholder who failed to pay the final call on 100 shares held by him. His shares were forfeited on 1st November after giving him a due notice. Show necessary entries in the books of the company to record these transactions.
Solution:

Question 41.
A company issued 10,000 Equity Shares of ₹ 10 each at a premium of ₹ 3 per share payable ₹ 5 on application, ₹ 5 (including premium) on allotment and the balance on first call. All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received.
Pass necessary journal entries to record the above.

Solution:

Question 42.
A company issued 10,000 shares of the value of ₹ 10 each, payable ₹ 3 on application, ₹ 3 on allotment and ₹ 4 on the first and final call. All amounts are duly received except the call money on 100 shares. These shares are subsequently forfeited by Directors and are resold as fully paid-up for ₹ 500.
Give necessary journal entries for the transactions.
Solution:

Question 43.
X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made. The forfeited shares were reissued for ₹ 90 per share, ₹ 75 paid-up. Journalise the above.
Solution:

Question 44.
The Directors of M Ltd resolved on 1st May, 2015 that 2,000 Equity Shares of ₹ 10 each, ₹ 7.50 paid be forfeited for non-payment of final call of ₹ 2.50. On 10th June, 2015, ₹ 1,800 of these shares were reissued for ₹ 6 per share. Give necessary Journal entries.
Solution:

Question 45.
Super Star Ltd. makes an issue of 10,000 Equity Shares of ₹ 100 each, payable as:
On application and allotment ₹ 50 per share
On first call ₹ 25 per share
On second and final call ₹ 25 per share.
Members holding 400 shares did not pay the second and final call and the shares are duly forfeited, 200 of which are reissued as fully paid-up @ ₹ 50 per share. Pass journal entries in the books of the company.
Solution:

Question 46.
A company issued 20,000 shares of ₹ 100 each payable ₹ 25 per share on application, ₹ 25 per share on allotment and the balance in two calls of ₹ 25 each. The company did not make the final call of ₹ 25 per share. All the money was duly received with the exception of the amount due on the first call on 400 shares held by Mr. Modi. The Board of Directors forfeited these shares and subsequently reissued them @ ₹ 75 per share paid-up for a sum of ₹ 28,000. journalise the above transactions and prepare Share Capital Account.
Solution:

Question 47.
The Hindustan Manufacturing Ltd. had a total subscribed capital of ₹ 10,00,000 in Equity Shares of ₹ 10 each of which ₹ 7.50 were called-up. A final call of ₹ 2.50 was made and all amount paid except two calls of ₹ 2.50 each in respect of 100 shares held by D. These shares were forfeited and reissued at ₹ 8 per share.
Pass necessary journal entries (including that of cash) to record the transactions of final call forfeiture of shares and reissue of forfeited shares. Also, prepare the Balance Sheet of the company.
Solution:

Question 48.
On 1st May, 2014, Directors of a Limited Company forfeited 200 shares of ₹ 20 each, ₹ 15 per share called-up, on which ₹ 10 per share has been paid by the amount of the first call of ₹ 5 per share being unpaid. Ten days Later, the Directors reissued the forfeited shares to B credited as ₹ 15 per share paid-up, for a payment of ₹ 10 per share.
Give journal entries in the company’s books to record the forfeited shares and their reissue.
Solution:

Question 49.
X Ltd. forfeited 100 shares of ₹ 10 each (₹ 8 called-up) issued at a premium of ₹ 2 per share to Mr. R on which he had paid applications money of ₹ 5 per share, for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 70 shares were reissued to Mr . Sanjay as ₹ 8 called-up for ₹ 7 per share. Give necessary journal entries relating to forfeiture and reissue of shares.
Solution:

Question 50.
A Limited Company forfeited 100 Equity Shares of the face value of ₹ 10 each, ₹ 6 per share called-up, for non-payment of first call of ₹ 2 per share. The forfeited shares were subsequently reissued as fully paid-up @ ₹ 7 each.
Give necessary entries in the company’s journal.
Solution:

Question 51.
Give necessary journal entries:
(i) The Directors of Devendra Ltd. resolved on 1st January, 2010 that Equity Shares of ₹ 10 each, ₹ 8 paid-up be forfeited for non-payment of final call of ₹ 2. On 1st February, 60 of these shares were reissued @ ₹ 7 per share as fully paid-up.
(ii) Virender Limited forfeited 20 shares of ₹ 100 each(₹ 60 called-up) issued at par to Mukesh on which he had paid ₹ 20 per share. Out of these, 15 shares were reissued to Sanjeev as ₹ 60 paid-up for ₹ 45 per share.
Solution:

Question 52.
Show the forfeiture and reissue entries under each of the following cases:
(i) X Ltd. forfeited 300 shares of ₹ 10 each, ₹ 8 called-up held by Mr. A for non-payment of second call money of ₹ 3 per share. These shares were reissued to Mr. Z for ₹ 10 per share as fully paid-up.
(ii) Y Ltd. forfeited 400 shares of ₹ 10 each, fully called-up, held by Mr. B for non-payment of final call money of ₹ 4 per share. These shares were reissued to Mr. T at ₹ 12 per share as fully paid-up.
(iii) Z Ltd. forfeited 250 shares of ₹ 10 each, fully called-up held by Mr. C for non-payment of allotment @ ₹ 8 per share as fully paid-up to Mr. P.
Solution:

Question 53.
Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) X Ltd. forfeited 20 shares of ₹ 10 each, ₹ 7 called-up on which the shareholder had paid application and allotment money of ₹ 5 per share. Out of these, 15 shares were reissued to Naresh as ₹ 7 per share paid-up for ₹ 8 per share.
(ii) Y Ltd. forfeited 90 shares of ₹ 10 each, ₹ 8 called-up issued at a premium of ₹ 2 per share to R for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as ₹ 8 called-up for ₹ 10 per share.
Solution:

Question 54.
Star Ltd. forfeited 500 Equity Shares of ₹ 100 each for non-payment of first call of ₹ 30 per share. The final call of ₹ 10 per share was not yet made. Out of these, 60% shares were reissued for ₹ 39,000 fully paid. journalise the forfeiture and reissue of shares.
Solution:

Question 55.
A holds 100 shares of ₹ 10 each on which he has paid ₹ 1 per share on application.
B holds 200 shares of ₹ 10 each on which he has paid ₹ 1 and ₹ 2 per share on application and allotment respectively.
C holds 300 shares of ₹ 10 each and has paid ₹ 1 on application, ₹ 2 on allotment and ₹ 3 on first call. They all fail to pay their arrears and the second call of ₹ 2 per share. Shares are forfeited and subsequently reissued @ ₹ 11 per share as fully paid-up.
journalise the above.
Solution:

Question 56.
A Ltd. company with registered capital of ₹ 5,00,000 in shares of ₹ 10 each issued 20,000 of such shares payable ₹ 2 on application, ₹ 4 on allotment, ₹ 2 on final call . All the money payable on allotment was duly received but on the first call being made, one shareholder paid the entire balance on his holding of 300 shares and five shareholders with a total holding of 1,000 shares failed to pay their dues on the first call. These shares were forfeited for non-payment of first call money. Final call was made and all the money due was received. Later on, forfeited shares were reissued @ ₹ 6 per share as fully paid-up.
Record the above in the company’s journal and prepare the Balance Sheet.
Solution:

Question 57.
New Company Ltd. has a nominal capital of ₹ 2,50,000 in shares of ₹ 10. Of these, 4,000 shares were issued as fully paid in payment of building purchased, 8,000 shares were subscribed by the public and during the first year ₹ 5 per share were called-up, payable ₹ 2 on application, ₹ 1 on allotment, ₹ 1 on first call and ₹ 1 on second call. The amounts received in respect of these shares were:

The Directors forfeited the 750 shares on which less than ₹ 4 had been paid. The shares were subsequently reissued at ₹ 3 per share.
Pass journal entries recording the above transactions and prepare the company’s Balance Sheet.
Solution:

Question 58.
X Ltd. invited applications for 10,000 Equity Shares of ₹ 10 each for public subscription. The amount of these shares was payable as:
On application ₹ 1 per share, on allotment ₹ 2 per share, on first call ₹ 3 per share and on second and final call ₹ 4 per share.
All sums payable on application, allotment and calls were duly received with the following exceptions:
(i) A, who held 200 shares, failed to pay the money on allotments and calls.
(ii) B to whom 150 shares were allotted, failed to pay the money on first call and final call.
(iii) C, who held 50 shares did not pay the amount of second and final call.
The shares of A, B and C were forfeited and were subsequently reissued for cash as fully paid-up at a discount of 5%.
Pass necessary journal entries to record these transactions in the books of X Ltd.
Solution:

Question 59.
A share of ₹ 100 issued at a premium of ₹ 10 on which ₹ 80 (including premium) was called and ₹ 60 (including premium) was paid, has been forfeited. This share was afterwards reissued as fully paid-up for ₹ 70. Give Journal entries to record the above.
Solution:

Question 60.
Pass journal entries in the following cases:
M Ltd. forfeited 200 Equity Shares of ₹10 each issued at a premium of ₹ 5 per share, held by Ram for non-payment of the final call of ₹ 3 per share. Of these, 100 shares were reissued to Vishu at a discount of ₹ 4 per share.
Solution:

Question 61.
VT Ltd forfeited 200 shares of ₹ 10 each, issued at a premium of ₹ 5 per share, held by Mohan for non-payment of the final call of ₹ 3 per share. 100 out of these shares were reissued to Narendra at a discount of ₹ 4 per share. Journalise.
Solution:

Question 62.
The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per share, for the non-payment of the first call money of ₹ 2 per share. The final call of ₹ 2 per share has not been made. Half the forfeited shares were reissued at ₹ 1,500 as fully paid-up. Record the journal entries for the forfeiture and reissue of shares.
Solution:

Question 63.
JCV Ltd., forfeited 200 shares of ₹ 10 each issued at a premium of ₹ 2 per share for the non-payment of allotment money of ₹ 3 per share (including premium). The first and final call of ₹ 4 per share has not been made as yet. 50% of the forfeited shares were reissued at ₹ 8 per share as fully paid-up. Pass necessary Journal entries for the forfeiture and reissue of shares.
Solution:

Question 64.
Pass necessary journal entries in the books of the company for the following transactions:
Vishesh Ltd. forfeited 1,000 Equity Shares of ₹ 10 each issued at a premium of ₹ 2 per share for non-payment of allotment money of ₹ 5 per share including premium. The final call of ₹ 2 per share was not yet called on these shares. Of the forfeited shares 800 shares were reissued at ₹ 12 per share as fully paid-up.
The remaining shares were reissued at ₹ 11 per share fully paid-up.
Solution:

Question 65.
150 shares of ₹ 10 each issued at a premium of ₹ 4 per share payable with allotment were forfeited for non-payment of allotment money of ₹ 8 per share including premium. The first and final call of ₹ 4 per Pass Journal entries in the books of X Ltd. for the above.
Solution:

Question 66.
Commence Publications Ltd. issued 50,000 Equity Shares of ₹ 10 each at a premium of 10% payable as under:

The calls were made by the company and all the money was duly received except the allotment and call money on 500 shares. These shares were, therefore, forfeited and later reissued @ ₹ 9 per share as fully paid-up.
Pass necessary journal entries to record the above transactions.
Solution:

Question 67.
Gaurav applied for 5,000 shares of ₹ 10 each at a premium of 2.50 per share. But he was allotted only 2,500 shares on pro rata basis. After having paid ₹ 3 per share on application, he did not pay allotment money of ₹ 4.50 per share (including premium) and on his subsequent failure to pay the first call of ₹ 2 per share, his shares were forfeited. These shares were reissued at the rate of ₹ 8 per share credited as fully paid.
Pass journal entries to record the forfeiture and reissue of shares.
Solution:

Question 68.
A Ltd issued 20,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share, payable as ₹ 7 (including premium) on application, ₹ 5 on allotment and the balance after three months of allotment.
A shareholder to whom 200 shares were allotted failed to pay the allotment and call money and his shares were forfeited. 160 of the forfeited shares were reissued for ₹ 1,600.
Give necessary entries in company’s journal and the Balance Sheet.
Solution:




.

Question 69.
Kamal Ltd. was formed on 1st April, 2010 with an authorised capital of ₹ 2,00,000, divided into 2,000 Equity Shares of ₹ 100 each. 1,000 shares were issued as fully paid to the vendors of building for payment of the purchase consideration. The remaining 1,000 shares were offered or public subscription at a premium of ₹ 5 per share payable as:

Applications were received for 900 shares which were duly allotted and the allotment money was received in full. At the time of the first call, a shareholder who held 100 shares failed to pay the first call money and his shares were forfeited. These shares were reissued @ ₹ 60 per share, ₹ 70 per share paid-up.
Final call has not been made.
You are required to
(i) give necessary journal entries to record the above transactions and
(ii) show how share capital would appear in the Balance Sheet of the company.
Solution:

Question 70.
Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹ 10 each, issued the entire amount of the shares payable as:
₹ 5 on application (including premium ₹ 2 per share),
₹ 4 on allotment, and
₹ 3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on which the allotment money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7 per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.
Solution:

Question 71.
Midee Ltd. invited applications for issuing 27,000 shares of ₹ 100 each payable as follows:
₹ 50 per share on application;
₹ 10 per share on allotment; and
Balance on First and Final call.
Applications were received for 40,000 shares. Full allotment was made to the applicants of 7,000 shares. The remaining applicants were allotted 20,000 shares on pro rata basis. Excess money received on applications was adjusted towards allotment and call.
Asha, holding 600 shares was belonged to the category of applicants to whom full allotment was made, paid the call money at the time of allotment. Ankur, who belonged to the category of applicants to whom shares were allotted on pro rata basis did not pay anything after application on his 200 shares. Ankur’s shares were forfeited after the First and Final call. These shares were later reissued at ₹ 105 per share as fully paid-up.
Pass necessary journal entries in the books of Midee Ltd. for the above transactions, by opening Calls-in-Arrears and Calls-in-Advance Accounts wherever necessary.
Solution:

Question 72.
VXN Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at a premium of ₹ 8 per share. The amount was payable as follows:

The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal’s shares were immediately forfeited after allotment. Afterwards, the first call was made. Krishna, a holder of 100 shares failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna’s shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received. All the forfeited shares were reissued at ₹ 9 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.
Solution:

Question 73.
Sukanya Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each. The shares were issued at a premium of ₹ 20 per share. The amount was payable as follows:

Applications for 96,000 shares were received. Rohit, a shareholder holding 7,000 shares, failed to pay both the calls and Namit a holder of 5,000 shares, did not pay the final call.
Shares of Rohit and Namit were forfeited. Of the forfeited shares 8,000 shares including all the shares of Rohit were reissued to Reena at ₹ 8 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of Sukanya Ltd.
Solution:

Question 74.
Alfa Ltd. invited applications for issuing 75,000 equity shares of ₹ 10 each. The amount was payable as follows:

Applications for 1,00,000 shares were received. Shares were allotted to all the applicants on pro rata basis and excess money received with applications was transferred towards sums due on first call. Vibha who was allotted 750 shares failed to pay the first call. Her shares were immediately forfeited. Afterwards the second call was made. The amount due on second call was also received except on 1,000 shares applied by Monika. Her shares were also forfeited. All the forefited shares were reissued to Mohit for ₹9,000 as fully paid-up.
Pass necessary journal entries in the Books of Alfa Ltd. for the above transactions.
Solution:

Question 75.
Himalaya Company Limited issued for public subscription 1,20,000 equity shares of ₹ 10 each at a premium for ₹ 2 per share payable as under:

Applications were received for 1,60,000 shares. Allotment was made on pro rata basis. Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at ₹ 7 per share.
Record journal entries and show the transactions relating to share capital in the company’s Balance Sheet.
Solution:

Question 76.
H Limited issued a prospectus inviting applications for 20,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as follows:
On application ₹ 2 ; on allotment ₹ 5 (including premium) ; on first call ₹ 3 ; on second and final call ₹ 2.
Applications were received for 30,000 shares and pro rata allotment was made on the applications for 24,000 shares. Money overpaid on applications was adjusted against amount due on allotment.
Ramesh, to whom 400 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay first call his shares were forfeited . Mohan, the holder of 600 shares, failed to pay two calls and his shares were forfeited after the second call.
Of the shares forfeited, 800 shares were sold to Krishna credited as fully paid-up for ₹ 9 per share, the whole of Ramesh’s shares being included.
Pass journal entries and prepare the Balance Sheet.
Solution:

Question 77.
Dogra Ltd. had an authorised capital of ₹ 1,00,00,000 divided into Equity Shares of ₹ 100 each. The company offered 84,000 shares to the public at premium. The amount was payable as follow:

Applications were received for 80,000 shares.
All sums were duly received except the following:
Lakhan, a holder of 200 shares did not pay allotment and call money.
Paras, a holder of 400 shares did not pay call money.
The company, forfeited the shares of Lakhan and Paras. Subsequently the forfeited shares were reissued for ₹ 80 per share as fully paid-up. Show the entries for the above transactions in the Cash Book and journal of the company.
Solution:

Question 78.
Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:

Applications for 1,50,000 shares were received. Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment. All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call. Shares of both Manu and Madhur were forfeited. The forfeited shares were reissued at ₹ 9 per share as fully paid-up.
Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.
Solution:

Question 79.
JJK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows:
On Application ₹ 2 per share,
On Allotment ₹ 4 per share; and
On First and Final call Balance Amount.
The issue was oversubscribed three times. Applications for 30% shares were rejected and money refunded. Allotment was made to the remaining applicants as follows:

Excess money paid by the applicants who were allotted shares was adjusted towards sums due on allotment.
Deepak, a shareholder belonging to Category I , who had applied for 1,000 shares ,failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment. Afterwards, first and final call was made and was duly received. The forfeited shares of Deepak and Raju were reissued at ₹ 11 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of company.
Solution:

Question 80.
Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of ₹ 10 each at a premium of ₹ 3 per share. The amount was payable as follows:

Applications for 1,80,000 shares were received. Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants. Over payment received on application was adjusted towards sums due on allotment. All calls were made and were duly received except allotment and final call from Aditya who was allotted 3, 200 shares. His shares were forfeited. Half of the forfeited shares were reissued for ₹ 43,000 as fully paid-up.
Pass necessary journal entries for the above transactions in the books of Nitro Paints Ltd.
Solution:

Question 81.
Raja Ltd. invited applications for issuing 50,000 Equity Shares of ₹ 10 each. The amount was payable as follows:

Applications for 70,000 shares were received. Allotment was made to all applicants on pro rata basis. Excess money received on application was adjusted towards sums due on allotment. Ramesh, who had applied for 700 shares did not pay the allotment money and on his failure to pay the allotment money his shares were forfeited. Afterwards, the first and the final call was made. Adhar, who had been allotted 500 shares, did not pay the first and final call. His shares were also forfeited. Out of the forfeited shares 900 shares were reissued at ₹ 8 per share as fully paid-up. The reissued shares included all the shares of Ramesh.
Pass necessary journal entries for the above transactions in the books of the company.
Solution:

Question 82.
XYZ Ltd. is registered with an authorised capital of ₹ 2,00,000 divided into 2,000 shares of ₹ 100 each of which 1,000 shares were offered for public subscription at a premium of ₹ 5 per share, payable as:

Applications were received for 1,800 shares, of which applications for 300 shares were rejected outright; the rest of the application were allotted 1,000 shares on pro rata basis. Excess application money was transferred to allotment.
All the money was duly received except from Sundar, holder of 100 shares, who failed to pay allotment and first call money. His shares were later forfeited and reissued to Shyam at ₹ 60 per share ₹ 70 paid-up. Final call has not been made.
Pass necessary Journal entries and prepare Cash Book in the books of XYZ Limited.
Solution:

Question 83.
Prince Limited issued a prospectus inviting applications for 20,000 equity shares of ₹ 10 each at a premium of ₹ 3 per share payable as follows:

Applications were received for 30,000 shares and allotment was made on pro rata basis. Money overpaid on application s was adjusted to the amount due on allotment.
Mr. Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call and his shares were forfeited after the first call. Mr. Joly, whom 600 shares were allotted failed to pay for the two calls and hence, his shares were forfeited.
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for ₹ 9 per share, the whole of Mr Mohit’s shares being included.
Solution:

Question 84.
XYZ Ltd. invited applications for issuing 50,000 Equity Shares of ₹10 each. The amount was payable as:

Applications were received for 75,000 shares and pro rata allotment was made as:
Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis.
Applicants for 35,000 shares were allotted 30,000 shares on pro rata basis.
Ramu, to whom 1,200 shares were allotted out of the group applying for 40,000 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment.
Shamu, who had applied for 700 shares out of the group applying for 35,000 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 1,000 shares were reissued @ Applicants for 40,000 shares were allotted 30,000 shares on pro rata basis. 8 per share as fully paid-up. The reissued shares included all the forfeited shares of Shamu.
Pass necessary Journal entries to record the above transactions.
Solution:

Question 85.
A company issued for public subscription 40,000 Equity Shares of ₹ 10 each at a premium of ₹ 2 per share payable as:

Applications were received for 60,000 shares. Allotment was made on pro rata basis to the applicants for 48,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards sums due on allotment. Ram to whom 1,600 shares were allotted failed to pay the allotment money and Shyam to whom 2,000 shares were allotted failed to pay the two calls. These shares were subsequently forfeited after the second and final call was made. All the forfeited shares were reissued as fully paid-up @ ₹ 8 per share.
Give necessary Journal entries for the above transactions.
Solution:

Question 86.
X Ltd. issued a prospectus inviting applications for 50,000 Equity Shares of ₹ 10 each, payable ₹ 5 as per application (including ₹ 2 as premium), ₹ 4 as per allotment and the balance towards first and final call.
Applications were received for 65,000 shares. Application money received on 5,000 shares was refunded with letter of regret and allotments were made on pro rata basis to the applicants of 60,000 shares. Money overpaid on applications including premium was adjusted on account of sums due on allotment.
Mr Sharma to whom 700 shares were allotted failed to pay the allotment money and his shares were forfeited by the Directors on his subsequently failure to pay the call money.
All the forfeited shares were subsequently sold to Mr.Jain credited as fully paid-up for ₹ 9 per share.
You are required to set out the journal entries and the relevant entries in the Cash Book.
Solution:

Question 87.
Super Star Ltd. issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as:

Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares. It was decided to utilise excess application money towards the amount due on allotment.
Ramesh, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited.
Rajesh, who applied for 72 shares failed to pay the two calls and on such failure, his shares were forfeited.
Of the shares forfeited, 80 shares were sold to Krishan credited as fully paid-up for ₹ 9 per share, the whole of Ramesh’s shares being included.
Give journal entries to record the above transactions (including cash transactions).
Solution:

Question 88.
Bharat Ltd. invited applications for issuing 2,00,000 Equity Shares of ₹ 10 each. The amount was payable as:
On application ₹ 3 per share, on allotment ₹ 5 per share and on first and final call ₹ 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis.
Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis.
Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Sharma, who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call. His shares were also forfeited.
Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ ₹ 8 per share. The reissued shares included all the forfeited shares of Bajaj.
Give necessary journal entries to record the above transactions.
Solution:

Question 89.
Amrit Ltd. issued 50,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as ₹ 3 on application, ₹ 4 on allotment (including premium), ₹ 2 on first call and the remaining on second call.
Applications were received for 75,000 shares and pro rata allotment was made to all the applicants.
All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for ₹ 9,600. Final call was not made. Pass necessary Journal entries.
Solution:

Question 90.
The Directors of Super Star Ltd. invited applications for 2,00,000 Equity Shares of ₹ 10 each to be issued at 20% premium. The money payable per shares was: on application ₹ 5 , O allotment ₹ 4 (including premium of ₹ 2), first call ₹ 2 and final call ₹ 1.
Applications were received for 2,40,000 shares and allotment was made as:
(i) to applicants for 1,00,000 shares in – full,
(ii) to applicants for 80,000 shares – 60,000 shares,
(iii) to applicants for 60,000 shares – 40,000 shares.
Applicants of 1,000 shares falling in Category
(i) and applicants of 1,200 shares falling in Category
(ii) failed to pay allotment money. These shares were forfeited on failure to pay first call. Holders of 1,200 shares falling in Category
(iii) failed to pay the first and final call and these shares were forfeited after final call.
1,300 shares [1,000 of Category(i) and 300 of Category (ii)] were reissued at ₹ 8 per share as fully paid-up.
Journalise the above transactions. Prepare Cash book and Balance Sheet.
Solution:

Question 91.
XYZ Ltd. issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a premium of ₹ 4 per share payable as:
On application – ₹ 6 (including ₹ 1 premium)
On allotment – ₹ 2 (including ₹ 1 premium)
On first call – ₹ 3 (including ₹ 1 premium)
On second and final call – ₹ 3 (including ₹ 1 premium)
Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares. It was decided to utilise excess application money towards the amount due on allotment.
X, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call his shares were forfeited.
Y, who applied for 72 shares failed to pay the two calls and on his such failure his shares were forfeited.
Of the shares forfeited 80 shares were sold to Z credited as fully paid-up for ₹ 9 per share the whole of Y’s shares being included. Prepare Journal, Cash Book and the Balance Sheet.
Solution:

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TS Grewal Accountancy Class 12 Solutions Chapter 10 Redemption of Debentures are part of TS Grewal Accountancy Class 12 Solutions. Here we have given TS Grewal Accountancy Class 12 Solutions Chapter 10 Redemption of Debentures.

TS Grewal Accountancy Class 12 Solutions Chapter 10 Redemption of Debentures

Question 1.
A public limited company is a manufacturer of chemical fertilisers. Its annual turnover is ₹ 50 crores. The company had issued 5,000, 12% Debentures of ₹ 500 each at par. Calculate the amount of Debentures Redemption Reserve which needs to be created to meet the requirements of law.
Solution:

Question 2.
Z Ltd. had issued following debentures:
(a) 1,00,000, 10% fully convertible debentures of ₹ 100 each on 1st April, 2016 redeemable by conversion after 5 years.
(b) 20,000, 10% Debentures of ₹ 100 each redeemable after 4 years, 25% Debentures in Cash and 75% by conversion.
State the amount of DRR required to be created as per the Companies Act,2013.
Solution:

Question 3.
Dow Ltd. issued ₹ 2,00,000; 8% Debentures of ₹ 10 each at a premium of 8% on 30th June, 2016 redeemable on 31st March, 2018. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures?
Solution:

Question 4.
Nirbhai Chemicals Ltd.issued ₹ 10,00,000; 6% Debentures of ₹ 50 each at a premium of 8% on 30th June, 2017 redeemable on 30th June, 2018. The issue was fully subscribed. Pass journal entries for issue and redemption of debentures. How much amount should be transferred to Debentures Redemption Reserve before redemption of debentures? Also, state how much amount should be invested in specified securities ?
Solution:

Question 5.
Export-Import Bank of India (EXIM Bank) issued 20,000, 10% Debentures of ₹ 100 each through public issue and 10,000, 10% Debentures of ₹ 100 each through private placement. State the amount of investment to be made by EXIM Bank before redemption of debentures.
Solution:

Question 6.
SRCC Ltd. has issued on 1st April, 2016, 20,000, 12% Debentures of ₹ 100 each redeemable by draw of lots as under:
During the year ended on 31st March, 2017 – 15 %
During the year ended on 31st March, 2018 – 25 %
During the year ended on 31st March, 2019 – 15 %
During the year ended on 31st March, 2020 – 25 %
During the year ended on 31st March, 2021 – 20 %
How much minimum investment or deposit should be made by SRCC Ltd. as per Companies Act, 2013 before redemption of debentures? When should it be made ?
Solution:

Question 7.
IFCI Ltd.(An All India Financial Institution) issued 10,00,000; 9% Debentures of SRCC Ltd. ₹ 50 each on 1st April, 2011 redeemable on 1st April, 2017. How much amount of Debentures Redemption Reserve is required before the redemption of debentures ? Also,pass journal entries for issue and redemption of debentures.
Solution:

Question 8.
On 31st March, 2003, G Ltd. had ₹ 8,00,000; 9% Debentures due for redemption. The company had a balance of ₹ 1,40,000 in its Debentures Redemption Reserve. Pass necessary journal entries for redemption of debentures.
Solution:

Question 9.
On 31st March, 2016, W Ltd. had the following balances in its books:
9% Debentures – ₹ 6,00,000
Debentures Redemption Reserve – ₹ 50,000
Surplus, i.e. Balance in Statement of Profit and Loss – ₹ 3,00,000
On that date, the company decided to transfer ₹ 1,00,000 to Debentures Redemption Reserve. It also decided to redeem debentures of ₹ 3,00,000 on 30th June, 2016.
Pass necessary journal entries in the books of the company.
Solution:

Question 10.
A Ltd. has credit balance of ₹ 1,26,000 in Surplus, i.e., Balance in Statement of Profit and Loss. Instead of declaring dividend it is resolved to utilize the profits to redeem its ₹ 1,20,000 Debentures redeemable at a premium of 5%.
Pass necessary journal entries in the books of the company.
Solution:

Question 11.
Mansi Ltd. had 6,000; 10% Debentures of ₹ 100 each due for redemption on 31st March, 2017. Assuming that the debentures were redeemed out of profits, pass necessary journal entries for the redemption of debentures. There was a credit balance of ₹ 6,00,000 in Surplus, i.e, Balance in Statement of Profit and Loss.
Solution:

Question 12.
India Textiles Corporation Ltd. has outstanding ₹ 50,00,000; 9% Debentures of ₹ 100 each due for redemption on 31st July, 2017. Pass journal entries for redemption assuming that there is a balance of ₹ 3,00,000 in Debentures Redemption Reserve on the date of redemption.
Solution:

Question 13.
Manish Ltd.issued ₹ 40,00,000; 8% Debentures of ₹ 100 each on 1st April, 2016. The terms of issue stated that the debentures are to be redeemed at a premium of 5% on 30th June, 2018. The company decided to transfer ₹ 10,00,000 out of profits to Debentures Redemption Reserve on 31st March, 2017 and ₹ 10,00,000 on 31st March, 2018.
Pass journal entries regarding the issue and redemption of debentures, DRR and investment without providing for the interest or loss on issue of debentures.
Solution:

Question 14.
Godrej Ltd. has 20,000; 7% Debentures of ₹ 100 each due for redemption on 31st August, 2017. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March,2015. Investment, as required by the Companies Act, 2013 is made on 1st April, 2016 in fixed deposit bearing interest @ 6 % p.a. Bank deducted TDS @ 10 % on its maturity which is 31st March, 2017.
Pass journal entries for redemption of debentures.
Solution:

Question 15.
Apollo Ltd. issued 21,000; 8% Debentures of ₹ 100 each on 1st April, 2011 redeemable at a premium of 8% on 30th June, 2017. The company decided to transfer the required amount to Debentures Redemption Reserve in three equal annual installments starting with 31st March, 2015. Required investment was made in Government Securities on 30th April, 2017. Ignore interest on debentures and also investment.
Pass necessary journal entries regarding issue transfer to DRR, investment, and redemption of debentures.
Solution:

Question 16.
JB Ltd. issued ₹ 10,00,000; 6% Debentures at a premium of 4% redeemable at a premium of 5% after four years. The debentures were issued on 1st April,2014. Pass journal entries at the time of issue and redemption of debentures assuming that all legal requirements were complied.
Solution:

Question 17.
On 1st April, 2014, following were the balances of Blue Bird Ltd.
10% Debentures (redeemable on 30th September, 2017) – ₹ 15,00,000
Debentures Redemption Reserve – ₹ 2,00,000
The company met the requirements of the Companies Act, 2013 regarding Debentures Redemption Reserve and Investment and redeemed the debentures.
Pass necessary journal entries for the above transactions in the books of the company.
Solution:

Question 18.
Mahima Ltd.issued ₹ 38,00,000, 9% Debentures of ₹ 100 each on 1st April, 2013. The debentures were redeemable at a premium of 5% on 30th June, 2015. The company transferred an amount of ₹ 9,50,000 to Debentures Redemption Reserve on 31st March, 2015. Investments as required by law were made in fixed deposit of a bank on 1st April, 2015.
Ignoring interest on fixed deposit, pass necessary journal entries starting from 31st March, 2015 regarding redemption of debentures.
Solution:

Question 19.
On 1st April, 2013 the following balances appeared in the books of Blue and Green Ltd.:
12 % Debentures (Redeemable on 31st August, 2015) – ₹ 20,00,000
Debentures Redemption Reserve – ₹ 2,00,000.
The company met the requirements of Companies Act, 2013 regarding Debentures Redemption Reserve and Debentures Redemption Investments and redeemed the debentures.
Ignoring interest on investments, pass necessary journal entries for the above transactions in the books of company.
Solution:

Question 20.
Rich sugar Ltd. issued ₹ 20 Lakh, 8% Debentures divided into debentures of ₹ 100 each on 1st April, 2013, redeemable in four equal annual installments starting from 31st March, 2016. The company decided to transfer to Debentures Redemption Reserve ₹ 2,50,000 each year on 31st March, 2014 and 2015.
The company invested ₹ 3,00,000 in Government securities as required by the Companies Act, 2013.
Pass necessary journal entries for the above transactions.
Solution:

Question 21.
Hp Ltd. has 1,00,000; 8% Debentures of ₹ 50 each due for redemption in five equal annual installments starting from 30th June, 2015. Debentures Redemption Reserve has a balnce of ₹ 5,00,000 on that date. Pass journal entries.
Solution:

Question 22.
Venus Ltd. had 9,000, 9% Debentures of ₹ 100 each due for redemption. These debentures are to be redeemed in 3 equal installments (starting from 31st March,2015) at a premium of 10%. The company had a balance of ₹ 25,000 in the Debentures Redemption Reserve.
Pass necessary entries for redemption of debentures assuming that company transfer the balance of DRR to General Reserve after redeeming all the debentures.
Solution:

Question 23.
Shakti Enterprises Ltd. issued 30,000; 8% Debentures of ₹ 100 each on 1st October, 2014 redeemable in five equal annual installments starting with 31st March, 2018. The Board decides to transfer to Debentures Redemption Reserve ₹ 50,000 and ₹ 4,00,000 on 31st March 2015 and 2016 respectively and balance required to be transferred to Debentures Redemption Reserve on 31st March, 2017. Pass journal entries.
Solution:

Question 24.
Tata Motors Ltd. issued 40,000; 7% Debentures of ₹ 100 each on 1st July, 2009 redeemable at premium of 5% as under:
On 31st March, 2015 – 16,000 Debentures
On 31st March, 2016 – 16,000 Debentures
On 31st March, 2017 – 8,000 Debentures
It was decided to transfer amount out of profit to Debentures Redemption Reserve ₹ 2,00,000 on 31st March, 2012; ₹ 4,00,000 on 31st March, 2013 and balance on 31st March, 2014. It invested the required amount in terms of the Companies Act, 2013 in Government Securities and decided to realise them after last redemption. Paas journal entries ignoring interest.
Solution:

Question 25.
Ananya Ltd. had an authorised capital of ₹ 10,00,00,000 divided into 10,00,000 equity shares of ₹ 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March,2007 was ₹ 30. The management decided to export its products to African countries. To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
(a) Issue 47, 500 equity shares at a premium of ₹ 100 per share.
(b) Obtain a long-term loan from bank which was available at 12% per annum.
(c) Issue 9% Debentures at a discount of 5%.
After evaluating these alternatives, the company decided to issue 1,00,000, 9% Debentures on 1st April, 2008. The face value of each debentures was ₹ 100. These debentures were redeemable in four installments starting from the end of third year, which were as follows:

Prepare 9% Debenture Account form 1st April, 2008 till all the debentures were redeemed.
Solution:

We hope the TS Grewal Accountancy Class 12 Solutions Chapter 10 Redemption of Debentures help you. If you have any query regarding TS Grewal Accountancy Class 12 Solutions Chapter 10 Redemption of Debentures, drop a comment below and we will get back to you at the earliest.

TS Grewal Accountancy Class 12 Solutions Chapter 3 Change in Profit – Sharing Ratio Among the Existing Partners are part of TS Grewal Accountancy Class 12 Solutions. Here we have given TS Grewal Accountancy Class 12 Solutions Chapter 3 Change in Profit – Sharing Ratio Among the Existing Partners.

TS Grewal Accountancy Class 12 Solutions Chapter 3 Change in Profit – Sharing Ratio Among the Existing Partners

Question 1.
A and B are sharing profits and losses equally. With effect from 1st April, 2018, they agree to share profits in the ratio of 4 : 3. Calculate individual partner’s gain or sacrifice due to the change in ration.
Solution:

Question 2.
X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2018, they decide to share profits and losses in the ratio of 5 : 2 : 3. Calculate each Partner’s gain or sacrifice due to the change in ratio.
Solution:

Question 3.
X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2018, they decide to share profits and losses equally. Calculate each partner’s gain or sacrifice due to the change in ratio.
Solution:

Question 4.
A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. Calculate new profit-sharing ratio, sacrificing ratio and gaining ratio in each of the following cases:
Case 1. C acquires 1/5th share from A.
Case 2. C acquires 1/5th share equally form A and B.
Case 3. A, B and C will share future profits and losses equally.
Case 4. C acquires 1/10th share of A and 1/2 share of B.
Solution:

Question 5.
A, B and C shared profits and losses in the ratio of 3 : 2 : 1 respectively. With effect from 1st April, 2018, they agreed to share profits equally. The goodwill of the firm was valued at ₹ 18,000. Pass necessary Journal entries when:
(a) Goodwill Account is not opened; and
(b) Goodwill Account is opened.
Solution:

Question 6.
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2 . From 1st April, 2018, they decided to share profits and losses equally.
The Partnership Deed provides that in the event of any change in the profit-sharing ratio, the goodwill should be valued at two years purchase of
the average profit of the preceding five years . The profits and losses of the preceding years are:

You are required to calculate goodwill and pass journal entry.
Solution:

Question 7.
Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3 : 2 : 1. From 1st April, 2018, they decided to share profits and losses equally. The Partnership Deed provides that in the event of any change in the profit-sharing ratio, the goodwill shall be valued at three years purchase of the average profit of last five years . The profits and losses of the past five years are:
Profit – Year ended 31st March, 2014 – ₹ 1,00,000; 2015 – ₹ 1,50,000; 2017 – ₹ 2,00,000; 2018 – ₹ 2,00,000;
Loss – Year ended 31st March, 2016 – ₹ 50,000.
Pass the journal entries showing the working.
Solution:

Question 8.
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2 , decided to share future profits and losses equally with effect from 1st April, 2018. On that date , the goodwill appeared in the books at ₹ 12,000. But it was revalued at ₹ 30,000. Pass journal entries assuming that goodwill will not appear in the books of account.
Solution:

Question 9.
A and B are partners in a firm sharing profits in the ratio of 2 : 1 . They decided with effect from 1st April, 2017, that they would share profits in the ratio of 3 : 2 . But, this decision was taken after the profit for the year 2017-18 amounting to ₹ 90,000 was distributed in the old ratio.
Value of firm’s goodwill was estimated on the basis of aggregate of two years profits preceding the date decision became effective.
The profits for 2015-16 and 2016-17 were ₹ 60,000 and ₹ 75,000 respectively. It was decided that Goodwill Account will not be opened in the books of the firm and necessary adjustment be made through Capital Accounts which, on 31st March, 2018 stood, at ₹ 1,50,000 for A and ₹ 90,000 for B. Pass necessary journal entries and prepare Capital Accounts.
Solution:

Question 10.
Jai and Raj are partners sharing profits in the ratio of 3 : 2 . With effect from 1st April, 2018, they decided to share profits equally. Goodwill appeared in the books at ₹ 25,000 . As on 1st April, 2018, it was valued at ₹ 1,00,000 . They decided to carry goodwill in the books of the firm.
Pass the journal entry giving effect to the above.
Solution:

Question 11.
X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2 . With effect from 1st April, 2018, they decided to share future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss Account showed a credit balance of ₹ 1,50,000. Record the necessary journal entry for the distribution of the balance int he Profit and Loss Account immediately before the change in the profit-sharing ratio.
Solution:

Question 12.
A and B are partners in a firm sharing profits in the ratio of 4 : 1 . They decided to share future profits in the ratio of 3 : 2 w.e.f. 1st April,2018 . On that day, Profit and Loss Account showed a debit balance of ₹ 1,00,000.Pass journal entry to give effect to the above.
Solution:

Question 13.
X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2 . They decided to share future profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2018. They also decided to record the effect of the following accumulated profits,losses and reserves without affecting their book values by passing a single entry.

Pass an Adjustment Entry.
Solution:

Question 14.
A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in  the ratio of 2 : 3 : 5 . Give the journal entry to distribute Workmen Compensation Reserve of ₹ 1,20,000 at the time of change in profit-sharing ratio, when:
(i) no information is given.
(ii) there is no claim against it.
Solution:

Question 15.
X, Y and Z who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the journal entry to distribute Workmen Compensation Reserve of ₹ 1,20,000 at the time of change in profit-sharing ratio, when there is a claim of ₹ 80,000 against it.
Solution:

Question 16.
X, Y and Z who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in  the ratio of 2 : 3 : 5 . with effect from 1st April, 2018. Workmen Compensation Reserve appears at ₹ 1,20,000 in the Balance Sheet as at 31st March, 2018 and Workmen Compensation Claim is estimated at  ₹ 1,50,000. Pass journal entries for the accounting treatment of Workmen Compensation Reserve.
Solution:

Question 17.
A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5 . Give the journal entry to distribute Investments Fluctuation Reserve of ₹ 20,000 at the time of change in profit-sharing ratio, when investment (market value ₹ 95,000) appears in the books at ₹ 1,00,000.
Solution:

Question 18.
Nitin, Tarun and Amar are partners sharing profits equally and decide  to share profits in the ratio of 2 : 2 : 1 w.e.f . 1st April, 2018. The extract of their Balance Sheet as at 31st March, 2018 is as follows:

Pass the journal entries in each of the following situations:
(i) When its Market Value is not given;
(ii) When its Market Value is given as ₹ 4,00,000;
(iii) When its Market Value is given as ₹ 4,24,000;
(iv) When its Market Value is given as ₹ 3,70,000;
(v) When its Market Value is given as ₹ 3,10,000.
Solution:

Question 19.
X, Y are partners sharing profits in the ratio of 2 : 1 . On 31st March, 2018, their Balance Sheet showed General Reserve of ₹ 60,000. It was decided that in future they will share profits and losses in the ratio of 3 : 2 . Pass necessary journal entry in each of the following alternative cases:
(i) If General Reserve is not to be shown in the new Balance Sheet.
(ii) If General Reserve is to be shown in the new Balance Sheet.
Solution:

Question 20.
X and Y are in partnership sharing profits in the ratio of 2 : 3 . With effect from 1st April, 2018, they agreed to share profits in the ratio f 1 : 2 . For this purpose, goodwill of the firm is to be valued at two years purchase of the average profit of last three years , which were ₹ 1, 50,000; ₹ 1,60,000 and ₹ 2,00,000 respectively. The reserves appear in the books at ₹ 1,10,000. Partners decide to continue showing Reserves in the books . You are required to give effect to the change by passing a single journal entry.
Solution:

Question 21.
X, Y and Z share profits as 5 : 3 : 2 . They decide to share their future profits as 4 : 3 : 3 with effect from 1st April, 2018. On this date the following revaluations have taken place :

Pass necessary adjustment entry to be made because of the above changes in the values of assets and liabilities. However, old values will continue in the books.
Solution:

Question 22.
Ashish, Aakash and Amit are partners sharing profits and losses  equally. The Balance Sheet as at 31st March, 2018 was as follows:

The partners decided to share profits in the ratio of 2 ; 2 : 1 w.e.f. 1st April, 2018. They also decided that:
(i) Value of stock to be reduced to ₹ 1,25,000.
(ii) Value of machinery to be decreased by 10%.
(iii) Land and Building to be appreciated by ₹ 62,000.
(iv) Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
(v) Aakash was to carry out reconstitution of the firm at a remuneration of ₹ 10,000.
Pass necessary journal entries to give effect to the above.
Solution:

Question 23.
A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2 . Their Balance Sheet as at 31st March, 2017 stood as follows:

They decided to share profits equally w.e.f 1st April, 2017. They also agreed that:
(i) Value of Land and Building be decreased by 5%.
(ii) Value of Machinery be increased. by 5%.
(iii) A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
(iv) A Motor Cycle valued at ₹ 20,000 was unrecorded and is now to be recorded in the books.
(v) Out of Sundry Creditors, ₹ 10,000 is not payable.
(vi) Goodwill is to be valued at 2 years purchase of last 3 years profits. Profits being for
2016-17 – ₹ 50,000 (Loss);
2015-16 – ₹2,50,000 and
2014-15 – ₹ 2,50,000.
(vii) C was to carry out the work for reconstituting the firm at a remuneration ( including expenses) of ₹ 5,000. Expenses came to ₹ 3,000.
Pass journal entries and prepare Revaluation Account.
Solution:

Question 24.
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1 . They decided to share profit w.e.f 1st April, 2018 in the ratio of 5 : 3 : 2 . They also decided not to change the values of assets and liabilities in the books of account . The book values and revised values of assets and liabilities as on the date of change were as follows:

Pass an adjustment entry.
Solution:

Question 25.
X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4 . Their Balance Sheet as at 31st March, 2018 stood as:

Partners decided that with effect from 1st April, 2018 , they will share profits and losses in the ratio of 3 : 2 : 1. For this purpose, goodwill of the
firm was valued at ₹ 1,50,000. The partners neither want to record the goodwill nor want to distribute the General Reserve and profits.
Solution:

Question 26.
A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1 . Their Balance Sheet as on 31st March, 2015 was as follows:

From 1st April, 2015, A, B and C decided to share profits equally. For this it was agreed that:
(i) Goodwill of the firm will be valued at ₹ 1,50,000.
(ii) Land will be revalued at ₹ 80,000 and building be depreciated by 6%.
(iii) Creditors of ₹ 6,000 were not likely to be claimed and hence should be written off.
Prepare Revaluation Account , Partners Capital Accounts and Balance Sheet of the reconstituted firm.
Solution:

Question 27.
A and B are partners sharing profits in the ratio of 4 : 3 . Their Balance Sheet as at 31st March, 2018 stood as:

They decided that with effect from 1st April, 2018, they will share profits and losses in the ratio of 2 : 1 . For this purpose they decided that:
(i) Fixed Assets are to be depreciated by 10%.
(ii) A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
(iii) Stock be valued at ₹ 1,90,000.
(iv) An amount of ₹ 3,700 included in Creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the Reserve. You are required to pass journal entries , prepare Capital Accounts of Partners and the revised Balance Sheet.
Solution:

Question 28.
X, Y and Z are partners in a firm sharing profits and losses as 5 : 4 : 3 . Their Balance Sheet as at 31st March, 2018 was:

From 1st April, 2018, they agree to alter their profit-sharing ratio as 4 : 3 : 2 .It is also decided that:
(a) Furniture be taken at 80% of its value.
(b) Stock be appreciated by 20%.
(c) Plant and Machinery be valued at ₹ 4,00,000.
(d) Outstanding Expenses be increased by ₹ 13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to distribute the General Reserve.
You are required to pass a single journal entry to give effect to the above . Also, prepare Balance Sheet of the new firm.
Solution:

Question 29.
Balance Sheet of X and Y, who share profits and losses as 5 : 3 , as at 1st April, 2017 is :

On the above date, they decided to change their profit-sharing ratio to 3 : 5 and agreed upon the following:
(a) Goodwill be valued on the basis of two years purchase of the average profit of the last three years.
Profits for 2014-15 : ₹ 7,500; 2015-16 : ₹ 4,000; 2016-17 : ₹ 6,500.
(b) Machinery and Stock be revalued at ₹ 45,000 and ₹ 8,000 respectively.
(c) Claim on account of workmen compensation is ₹ 6,000.
Prepare Revaluation Account Partners Capital Accounts and the Balance Sheeet of the new firm.
Solution:

Question 30.
Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1 . On 1st April, 2016 , their Balance Sheet was as follows:

From the above date, the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4 . For this purpose the goodwill of the firm was valued at ₹ 1,80,000. The partners also agreed for the following:
(a) The Claim for Workmen Compensation has been estimated at ₹ 1,50,000.
(b) Adjust the Capitals of the partners according to the new profit-sharing ratio by opening Partners Current Accounts.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the reconstituted firm.
Solution:

Question 31.
Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratio of 2 : 2 : 3 : 3 . On 1st April, 2016 , their Balance Sheet was as follows:

From the above date, the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at ₹ 90,000. It was also agreed that:
(a) Claim against Workmen Compensation Reserve will be estimated at ₹ 1,00,000 and fixed assets will be depreciated by 10%.
(b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the reconstituted firm.
Solution:

Question 32.
Following is the Balance Sheet of A and B, who shared Profits and Losses in the ratio of 2 : 1 , as at 1st April, 2018:

On the above date , the partners changed their profit-sharing ratio to 3 : 2 . For this purpose, the goodwill of the firm was valued at ₹ 3,00,000 . The partners also agreed for the following:
(a) The value of Land and Building will be ₹ 5,00,000;
(b) Reserve is to be maintained at ₹ 3,00,000.
(c) The total capital of the partners in the new firm will be ₹ 6,00,000, which will be shared by the partners in their new profit-sharing ratio.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the reconstituted firm.
Solution:

We hope the TS Grewal Accountancy Class 12 Solutions Chapter 3 Change in Profit – Sharing Ratio Among the Existing Partners help you. If you have any query regarding TS Grewal Accountancy Class 12 Solutions Chapter 3 Change in Profit – Sharing Ratio Among the Existing Partners, drop a comment below and we will get back to you at the earliest.

TS Grewal Accountancy Class 12 Solutions Chapter 2 Goodwill: Nature and Valuation are part of TS Grewal Accountancy Class 12 Solutions Here we have given TS Grewal Accountancy Class 12 Solutions Chapter 2 Goodwill: Nature and Valuation.

TS Grewal Accountancy Class 12 Solutions Chapter 2 Goodwill: Nature and Valuation

Question 1.
Goodwill is to be valued at three years purchase of four years average profit. Profits for last four years ending on 31st March of the firm were:
2015 ₹ 12,000; 2016 ₹ 18,000; 2017 ₹ 16,000; 2018 ₹ 14,000.
Calculate amount of Goodwill.
Solution:

Question 2.
The profit for the five years ending on 31st March, are as follows:
Year 2014 ₹ 4,00,000; Year 2015 ₹ 3,98,000; Year 2016 ₹ 4,50,000; Year 2017 ₹ 4,45,000; Year 2018 ₹ 5,00,000.
Calculate goodwill of the firm on the basis of 4 years purchase of 5 years average profit.
Solution:

Question 3.
Calculate value of goodwill on the basis of three years purchase of average profit of the preceding five years which were as follows:

Solution:

Question 4.
Calculate the value of firm’s goodwill on the basis of one and half years purchase of the average profit of the last three years. The profit for first year was ₹ 1,00,000, profit for the second year was twice the profit of the first year and for the third year profit was one and half times of the profit of the second year.
Solution:

Question 5.
A and B are partners sharing profits in the ratio of 3 : 2. They decided to admit C as a partner from 1st April, 2018 on the following terms:
(i) C will be given 2/5th share of the profit.
(ii) Goodwill of the firm be valued at two years purchase of three years normal average profit of the firm.
profits of the previous three years ended 31st March, were:
2018 – Profit ₹ 30,000 ( after debiting loss of stock by fire ₹ 40,000).
2017 – Loss ₹ 80,000 (includes voluntary retirement compensation paid ₹ 1,10,000).
2016 – Profit ₹ 1,10,000 (including a gain (profir) of ₹ 30,000 on the sale of fixed assets).
you are required to value the goodwell.
Solution:

Question 6.
X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership for 1/4th share in goodwill. Z brings in his share of goodwill in cash. Goodwill for this purpose is to be calculated at two years purchase of the average normal profit of past three years. Profits of the last three years ended 31st March, were:
2016 – Profit ₹ 50,000 (including profit on sale of assets ₹5,000).
2017 – Loss ₹ 20,000 (includes loss by fire ₹ 30,000).
2018 – Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and Dividend received ₹ 8,000).
Calculate value of goodwill. Also, calculate goodwill brought in by Z.
Solution:

Question 7.
A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. They decide to take C into partnership for 1/4th share on 1st April, 2018. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years whichever is higher. The agreed profits for goodwill purpose of the past five years are:

Solution:

Question 8.
Sumit purchased Amit’s business on 1st April, 2018. Goodwill was decided to be valued at two years’ purchase of average normal profit of last
four years. The profits for the past four years were:

Books of Account revealed that:
(i) Abnormal loss of ₹ 20,000 was debited to Profit and Loss Account for the year ended 31st March, 2015.
(ii) A fixed asset was sold in the year ended 31st March, 2016 and gain (profit) of ₹ 25,000 was credited to Profit and Loss Account.
(iii) In the year ended 31st March, 2017 assets of the firm were not insured due to oversight. Insurance premium not paid was ₹ 15,000.
Calculate the value of goodwill.
Solution:

Question 9.
X and Y are partners in a firm. They admit Z into partnership for equal share. It was agreed that goodwill will be valued at three years purchase of average profit of last five years. Profits for the last five years were:

Books of Account of the firm revealed that:
(i) The firm had gain (profit) of ₹ 50,000 from sale of machinery sold in the year ended 31st March, 2015. The gain (profit) was credited in Profit and Loss Account.
(ii) There was an abnormal loss of ₹ 20,000 incurred in the year ended 31st March, 2016 because of a machine becoming obsolete in accident.
(iii) Overhauling cost of second hand machinery purchased on 1st July, 2016 amounting to ₹ 1,00,000 was debited to Repairs Account. Depreciation is charged @ 20% p.a. on Written Down Value Method.
Calculate the value of goodwill.
Solution:

Question 10.
Profits of a firm for the year ended 31st March for the last five years were:

Calculate value of goodwill on the basis of three years purchase of Weighted Average Profit after assigning weights 1, 2, 3, 4 and 5 respectively to the profits for years ended 31st March, 2014, 2015, 2016, 2017 and 2018.
Solution:

Question 11.
A and B are partners sharing profits and losses in the ratio of 5 : 3. On 1st April, 2018, C is admitted to the partnership for 1/4th share of profits. For this purpose, goodwill is to be valued at two years purchase of last three years profits (after allowing partners remuneration). Profits to be weighted 1 : 2 : 3, the greatest weight being given to last year. Net profit before partners remuneration were: 2015-16: ₹ 2,00,000; 2016-17: ₹ 2,30,000; 2017 -2018: ₹ 2,50,000. The remuneration of the partners is estimated to be ₹ 90,000 p.a. Calculate amount of goodwill.
Solution:

Question 12.
Manbir and Nimrat are partners and they admit Anahat into partnership. It was agreed to value goodwill at three tears purchase on Weighted Average Profit Method taking profits of last five years. Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to profit for the year ended 31st March, 2014 to 2108. The profit for these years were: ₹ 70,000, ₹ 1,40,000, ₹ 1,00,000, ₹ 1,60,000 and ₹ 1,65,000 respectively.
Scrutiny of books of account revealed following information:
(i) There was an abnormal loss of ₹ 20,000 in the year ended 31st March, 2014.
(ii) There was an abnormal gain (profit) of ₹ 30,000 in the year ended 31st March, 2015.
(iii) Closing Stock as on 31st March, 2017 was overvalued by ₹ 10,000.
Calculate the value of goodwill.
Solution:

Question 13.
Calculate the goodwill of a firm on the basis of three years purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are:

On a scrutiny of the accounts, the following matters are revealed:
(i) On 1st December, 2016, a major repair was made in respect of the plant incurring ₹ 30,000 which was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method.
(ii) The closing stock for the year 2015-16 was overvalued by ₹ 12,000.
(iii) To cover management cost, an annual charge of ₹ 24,000 should be made for the purpose of goodwill valuation.
(iv) In 2015-16, a machine having a book value of ₹ 10,000 was sold for ₹ 11,000 but the proceeds were wrongly credited to Profit and Loss Account. No effect has been given to rectify the same. Depreciation is charged on machine @ 10% p.a. on reducing balance method.
Solution:

Question 14.
Gupta and Bose had a firm in which they had invested ₹ 50,000. On an average, the profits were ₹ 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years purchase of profits in excess of profits @ 15% on the money invested. Value th goodwill.
Solution:

Question 15.
The total capital of the firm of Sakshi, Mehak and Megha is ₹ 1,00,000 and the market rate of interest is 15%. The net profits for the last 3 years were ₹ 30,000; ₹ 36,000 and ₹ 42,000. Goodwill is to be valued at 2 years purchase of the last 3 years super profits. Calculate the goodwill of the firm.
Solution:

Question 16.
The average net profit expected in future by XYZ firm is ₹ 36,000 per year. Average capital employed in the business by the firm is ₹ 2,00,000. The normal rate of return from capital invested in this class of business in 10%. Remuneration of the partners is estimated to be ₹ 6,000 p.a. Find out the value of goodwill on the basis of two years purchase of super profit.
Solution:

Question 17.
A partnership firm earned net profits during the last three years ended 31st March, as follows: 2016 – ₹ 17,000; 2017 – ₹ 20,000; 2018 – ₹ 23,000.
The capital investment in the firm throughout the above-mentioned period has been ₹ 80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital. Calculate value of goodwill on the basis of two years purchase of average super profit earned during the above-mentioned three years.
Solution:

Question 18.
A partnership firm earned net profits during the past three years as follows:

Capital investment in the firm throughout the above-mentioned period has been ₹ 4,00,000. Having regard to the risk involved, 15% in considered to be a fair return on the capital. The remuneration of the partners during this period is estimated to be ₹ 1,00,000 p.a.
Calculate value of goodwill on the basis of two years purchase of average super profit earned during the above-mentioned three years.
Solution:

Question 19.
A business earned an average profit of ₹ 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10%. The total value of assets and liabilities of the business were ₹ 22,00,000 and ₹ 5,60,000 respectively. Calculate the value of goodwill of the firm by super profit method if it is valued at 2\(\frac { 1 }{ 2 }\) years purchase of super profits.
Solution:

Question 20.
Capital of the firm of Sharma and Verma is ₹ 2,00,000 and the market rate of interest is 15%. Annual salary to partners is ₹ 12,000 each. The profits for the last three years were ₹ 60,000; ₹ 72,000 and ₹ 84,000. Goodwill is to be valued at 2 years purchase of last 3 years average super profit. Calculate goodwill of the firm.
Solution:

Question 21.
A and B are equal partners. They decide to admit C for 1/3rd share. For the purpose of admission of C, goodwill of the firm is to be valued at four years purchase of super profit. Average capital employed in the firm is ₹ 1,50,000. Normal rate of return may be taken as 15% p.a. Average profit of the firm is ₹ 40,000. Calculate value of goodwill.
Solution:

Question 22.
On 1st April, 2018, an existing firm had assets of ₹ 75,000 including cash of ₹ 5,000. Its creditors amounted to ₹ 5,000 on that date. The firm had a Reserve of ₹ 10,000 while Partners Capital Accounts showed a balance of ₹ 60,000. If Normal Rate of Return is 20% and goodwill of the firm is valued at ₹ 24,000 at four years purchase of super profit, find average profit per year of the existing firm.
Solution:

Question 23.
The average profit earned by a firm is ₹ 1,00,000 which includes undervaluation of stock of ₹ 40,000 on an average basis. The capital invested in the business is ₹ 6,30,000 and the normal tare of return is 5%. Calculate goodwill of the firm on the basis of 5 time the super profit.
Solution:

Question 24.
The average profit earned by a firm is ₹ 7,50,000 which includes overvaluation of stock of ₹ 30,000 on an average basis. The capital invested in the business is ₹ 4,20,000 and the normal tare of return is 15%. Calculate goodwill of the firm on the basis of 3 time the super profit.
Solution:

Question 25.
Ayub and Amit are partners in a firm and they admit Jaspal into partnership w. e. f. 1st April, 2018. They agreed to value goodwill at 3 years purchase of Super Profit Method for which they decided to average profit of last 5 years. The profit for the last 5 years were:

The firm has total assets of ₹ 20,00,000 and Outside Liabilities of ₹ 5,00,000 as on that date. Normal Rate of Return in similar business is 10%.
Calculate value of goodwill.
Solution:

Question 26.
From the following information, calculate value of goodwill of the firm by applying Capitalisation Method: Total Capital of the firm ₹ 16,00,000.
Normal rate of return 10%. Profit for the year ₹ 2,00,000.
Solution:

Question 27.
A business has earned average profit of ₹ 1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are ₹ 10,00,000 and its external liabilities are ₹ 1,80,000. The normal rate of return is 10%.
Solution:

Question 28.
Form the following particulars, calculate value of goodwill of a firm by applying Capitalisation of Average Profit Method:
(i) Profits of last five consecutive years ending 31st March are: 2018 – ₹ 54,000; 2017 – ₹ 42,000; 2016 – ₹ 39,000; 2015 – ₹ 67,000 and 2014 – ₹ 59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm ₹ 2,00,000.
Solution:

Question 29.
A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:
(i) Capitalisation of Super Profit Method, and
(ii) Super Profit Method if the goodwill is valued at 3 years purchase of super profits.
Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.
Solution:

Question 30.
A firm earns profit of ₹ 5,00,000. Normal Rate of Return in a similar type of business is 10%. The value of total assets (excluding goodwill) and total outsiders liabilities as on the date of goodwill are ₹ 55,00,000 and ₹ 14,00,000 respectively. Calculate value of goodwill according to Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.
Solution:

Question 31.
Average profit of the firm is ₹ 2,00,000. Total assets of the firm are ₹ 15,00,000 whereas Partners Capital is ₹ 12,00,000. If normal rate of return in a similar business is 10% of the capital employed, what is the value of goodwill by Capitalisation of Super Profit?
Solution:

Question 32.
Rajan and Rajani are partners in a firm. Their capitals were Rajan ₹ 3,00,000; Rajani ₹ 2,00,000. During the year 2017-18, the firm earned a profit of ₹ 1,50,000. Calculate the value of goodwill of the firm by capitalisation of super profit assuming that the normal rate of return is 20%.
Solution:

Question 33.
Average profit of GS & amp Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return of capital employed is 10%, calculate goodwill of the firm by:
(i) Super Profit Method at three years purchase; and
(ii) Capitalisation of Super Profit Method.
Solution:

Question 34.
From the following information, calculate value of goodwill of the firm:
(i) At three years purchase of Average Profit.
(ii) At three years purchase of Super Profit.
(iii) On the basis of Capitalisation of Super Profit.
(iv) On the basis of Capitalisation of Average profit.
Information:
(a) Average Capital Employed is ₹ 6,00,000.
(b) Net Profit/(Loss) of the firm for the last three years ended are:
31st March, 2108 – ₹ 2,00,000, 31st March, 2107 – ₹ 1,80,000, and 31st March, 2106 – ₹ 1,60,000.
(c) Normal Rate of Return in similar business is 10%.
(d) Remuneration of ₹ 1,00,000 to partners is to be taken as charge against profit.
(e) Assets of the firm (excluding goodwill, fictitious assets and not-trade investments) is ₹ 7,00,000 whereas Partners Capital is ₹ 6,00,000 and Outside Liabilities ₹ 1,00,000.
Solution:

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