Icwai accountancy question dec 2011 - doubt

Sir, the broad answers for your query are as under:

Gen. Reserve transferred to CRR - 50,000

15000 new shares of Rs.10 each issued at 20%

Amount due to Preference Shareholders - 2,20,000

Payment made to Preference Shareholders - 2,14,500

CRR transferred to Share Capital - 50,000

The question specifically states that they have issued only 14500 shares @ Rs.10 each @ premium of 20% - what is the accounting rule for the 500 shares, which is partly paid up and the whareabouts of the shareholder is not tracable.

1. The shares shall be forfeited assuming all the necessary steps have been taken for the sake of it.

Share capital a/c …..dr    5,000

        To calls in arrear             2,000

        To shares forfeited a/c  3,000

2. Rs. 50,000 can be used from general reserve for the purpose of redemption of pref shares. So, 15,000 shares shall be issued for further requirement of funds not considering premium of 20% as it is to be considered in further issue of 14,500 shares.

Bank a/c…………dr         1,50,000

        To share application    1,50,000

Share application……..dr   1,50,000

         To share capital                1,50,000

3. Redeem the pref shares

Premium on redemption of pref shares……..dr   20,000

Pref share capital………………………………………..dr  2,00,000

          To pref share holder                                               2,20,000

Pref share holder……dr 2,20,000

          To bank                           2,20,000

4. Transfer Rs. 50,000 to CRR

General reserve……….dr   50,000

          To CRR                            50,000

5. Proceeds from issue of further shares 14500 shares @ Rs.10, premium @ 20%

Bank…………….dr   1,74,000

          To share application 1,74,000

Share application……..dr 1,74,000

          To share capital            1,45,000

          To share premium           29,000

6. Now share premium balance shall be used to w/o premium on redemption of pref.shares

Share premium………..dr 20,000

        To premium on redemption of pref shares 20,000

7. Issue the bonus shares using CRR

CRR………..dr  50,000

         To equity share holder   50,000

Equity share holder……..dr 50,000

         To share capital                    50,000