12th Accountancy - Book Back Answers - Unit 7 - English Medium Guides

 

 

12th Accountancy - Book Back Answers -  Unit 7 - English Medium

Tamil Nadu Board 12th Standard Accountancy - Unit 7: Book Back Answers and Solutions

    This post covers the book back answers and solutions for Unit 7 –  from the Tamil Nadu State Board 12th Standard Accountancy textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

    We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

    By going through this material, you’ll gain a strong understanding of Unit 7 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

• 1 Mark Questions: Choose the correct answer, 
• 2 Mark Questions: Very Short Answer Questions
• 3, 4, and 5 Mark Questions: Short Answer Questions, Excercises
  

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 12th students! Prepare well and aim for top scores. Thank you!

Unit 7 : Company Accounts

I. Choose the correct Answer

1. A preference share is one ……………..
(i) which carries preferential right with respect to payment of dividend at fixed rate
(ii) which carries preferential right with respect to repayment of capital on winding up
(a) Only (i) is correct
(b) Only (ii) is correct
(c) Both (i) and (ii) are correct
(d) Both (i) and (ii) are incorrect
Answer Key:
(c) Both (i) and (ii) are correct

2. That part of share capital which can be called up only on the winding up of a company is called ……………..
(a) Authorised capital
(b) Called up capital
(c) Capital reserve
(d) Reserve capital
Answer Key:
(d) Reserve capital

3. At the time of forfeiture, share capital account is debited with ……………..
(a) Face value
(b) Nominal value
(c) Paid up amount
(d) Called up amount
Answer Key:
(d) Called up amount

 

4. After the forfeited shares are reissued, the balance in the forfeited shares account should be transferred to ……………..
(a) General reserve account
(b) Capital reserve account
(c) Securities premium account
(d) Surplus account
Answer Key:
(b) Capital reserve account

5. The amount received over and above the par value is credited to ……………..
(a) Securities premium account
(b) Calls in advance account
(c) Share capital account
(d) Forfeited shares account
Answer Key:
(a) Securities premium account

6. Which of the following statement is false?
(a) Issued capital can never be more than the authorised capital
(b) In case of under subscription, issued capital will be less than the subscribed capital
(c) Reserve capital can be called at the time of winding up
(d) Paid up capital is part of called up capital
Answer Key:
(b) In case of under subscription, issued capital will be less than the subscribed capital

7. When shares are issued for purchase of assets, the amount should be credited to ……………..
(a) Vendor’s A/c
(b) Sundry assets A/c
(c) Share capital A/c
(d) Bank A/c
Answer Key:
(c) Share capital A/c

8. Match the pair and identify the correct option:
(1)Under subscription    - (i) Amount prepaid for calls
(2)Over subscription    - (ii) Subscription above the offered shares
(3)Calls in arrear    - (iii) Subscription below the offered shares
(4)Calls in advance    - (iv) Amount unpaid on calls
        (1)    (2)    (3)    (4)
(a)    (i)    (ii)    (iii)    (iv)
(b)    (iv)    (iii)    (ii)    (i)
(c)    (iii)    (ii)    (iv)    (i)
(d)    (iii)    (iv)    (i)    (ii)

Answer Key:
(c) (iii) (ii) (iv) (i)

9. If a share of Rs. 10 on which Rs. 8 has been paid up is forfeited. Minimum reissue price is ……………..
(a) Rs. 10 per share
(b) Rs. 8 per share
(c) Rs. 5 per share
(d) Rs. 2 per share
Answer Key:
(d) Rs. 2 per share

10. Supreme Ltd. forfeited 100 shares of Rs. 10 each for non – payment of final call of Rs. per share. All these shares were re-issued at Rs. 9 per share. What amount will be transferred to capital reserve account?
(a) Rs. 700
(b) Rs. 800
(c) Rs. 900
(d) Rs. 1,000
Answer Key:
(a) Rs. 700

II.Very short answer questions

1.  What is a share?

• The capital of a company is divided into small units of fixed amount. These units are called shares. Types - (i) preference shares and (ii) equity shares.

 

2.  What is over-subscription?

• When the number of shares applied for is more than the number of shares offered for subscription, it is said to be over subscription.

 

3.  What is meant by calls in arrears?

• When a shareholder fails to pay the amount due on allotment or on calls, the amount remaining unpaid is known as calls in arrears.

 

4.  Write a short note on securities premium account.

• When a company issue shares at a price more than the face value (nominal value), the shares are said to be issued at premium.
• The excess is called as premium amount and is transferred to securities premium account.

 

5.  Why are the shares forfeited?

• When a shareholder defaults in making payment of allotment and/or call money, the shares may be forfeited.
• On forfeiture, the share allotment is cancelled and to that extent, share capital is reduced.

 

III. Short answer questions 

1.  State the differences between preference shares and equity shares.

 

Basis	Preference shares	Equity shares
1.Meaning	Preference shares are the shares that carry preferential rights on the matters of payment of dividend and repayment of capital.	Equity shares are the ordinary shares of the company representing the part ownership of the shareholder in the company.
2.Payment of dividend	Priority in payment of dividend over equity shareholders.	The    dividend   is    paid   after          the payment of all liabilities.
3.Rate of	Fixed	Fluctuating
4.Voting rights	No	Yes

 

 2.  Write a brief note on calls in advance.

• The excess amount paid over the called up value of a share is known as calls in advance. It is the excess money paid on application or allotment or calls.
• Such excess amount can be returned or adjusted towards future payment.
• Calls in advance does not form part of the company’s share capital and no dividend

 

3.  What is reissue of forfeited shares?

• Shares forfeited can be reissued by the company. The shares can be reissued at any price. But, the reissue price cannot be less than the amount unpaid on forfeited shares.
• If the reissue price is more than the amount unpaid on forfeited shares, it results in profit on reissue which is treated as capital profit and is transferred to capital reserve account.

 

4.  Write a short note on (a) Authorised capital (b) Reserve capital

 

(a)   Authorised capital

• It means such capital as is authorised by the memorandum of association. It is the maximum amount which can be raised as capital. It is also known as registered capital or nominal capital.

(b)   Reserve capital

• The company can reserve a part of its subscribed capital to be called up only at the time of winding up. It is called reserve capital.

 

5.  What is meant by issue of shares for consideration other than cash?

• A company may issue shares for consideration other than cash when the company acquires fixed assets such as land and buildings, machinery, etc.
• A company may also issue shares as consideration for the purchase of business, to promoters for their services and to brokers and underwriters for their commission.

 

IV. Excercises

Question 1.
Progress Ltd. issued 50,000 ordinary shares of Rs 10 each, payable Rs. 2 on the application, Rs. 4 on the allotment, Rs. 2 on the first call, and Rs. 2 on final call. All the shares are subscribed and the amount was duly received. Pass journal entries.
Answer Key:

Question 2.
Sampath company issued 25,000 shares at Rs. 10 per share payable Rs. 3 on the application, Rs. 4 on the allotment, RS 3 on the first and final call. The public subscribed for 24,000 shares. The directors allotted all the 24,000 shares and received the money duly. Pass necessary journal entries.
Answer Key:

Question 3.
Saranya Ltd. issued 20,000 equity shares of Rs. 10 each to the public at par. The details of the amount payable on the shares are as follows:
On application Rs. 3 per share
On allotment Rs. 4 per share
On the first and final call Rs. 3 per share
Application money was received on 30,000 shares. Excess application money was refunded immediately. Pass journal entries to record the above.
Answer Key:

Question 4.
Gaja Ltd issued 40,000 shares of Rs. 10 each to the public payable Rs. 2 on the application, Rs. 5 on the allotment, and Rs. 3 on the first and final call. Applications were received for 50,000 shares. The Directors decided to allot 40,000 shares on a pro-rata basis and a surplus of application money was utilized for allotment. Pass journal entries assuming that the amounts due were received.
Answer Key:
Journal Entries

Question 5.
Lalitha Ltd. offered 30,000 equity shares of Rs. 10 each to the public payable Rs. 2 per share on the application, Rs. 3 on share allotment, and the balance when required. Applications for 50,000 shares were received on which the directors allotted as:
Applicants for 10,000 shares – Full
Applicants for 35,000 shares – 20,000 shares (excess money will be utilized for allotment)
Applicants for 5,000 shares – Nil
All the money due was received. Pass journal entries upto the receipt of allotment.
Answer Key:

Journal Entries

Working Notes:

Question 6.
Das Ltd. offered 50,000 equity shares of Rs. 10 each to the public payable as follows:
On application Rs. 4; on allotment RS 3; on first call Rs. 1 and on second and final call Rs. 2. Applications were received for 1,00,000 shares. All the applicants were allotted 1 share for every two shares applied. Excess application money was used for the amount due on allotment and call. Pass necessary journal entries.
Answer Key:
Journal Entries

Question 7.
Anjali Flour Ltd. with a registered capital of Rs. 4,00,000 in equity shares of Rs. 10 each, issued 30,000 of such shares; payable Rs. 2 per share on application, Rs. 5 per share on allotment, and Rs. 3 per share on the first call. The issue was duly subscribed.
All the money payable was duly received but on allotment, one shareholder paid the entire balance on his holding of 500 shares. Give journal entries to record the transactions.
Answer Key:
Journal Entries

Question 8.
Muthu Ltd. issued 50,000 shares of Rs. 10 each payable as follows:
Rs. 2 on the application; Rs. 4 on allotment; Rs. 4 on first and final call.
All money was duly received except one shareholder holding 1,000 shares failed to pay the call money. Pass the necessary journal entries for calls by using calls in arrear account.
Answer Key:
Journal Entries

Question 9.
Arjun was holding 1,000 shares of Rs. 10 each of Vanavil Electronics Ltd, issued at par. He paid Rs. 3 on the application, Rs. 4 on the allotment but could not pay the first and final call of Rs. 3. The directors forfeited the shares for non – payment of call money. Give Journal entry for forfeiture of shares.
Answer Key:
Journal Entries

Question 10.
Lakshith was holding 50 shares of Rs. 10 each on which he paid Rs. 2 on application but could not pay Rs. 4 on the allotment and Rs. 2 on the first call. Directors forfeited the shares after the first call. Give journal entry for recording the forfeiture of shares.
Answer Key:

Question 11.
Goutham Ltd. forfeited 500 equity shares of Rs. 10 each issued at par held by Ragav for non – payment of the final call of Rs. 2 per share. The shares were forfeited and reissued to Madhan at RS 8 per share. Show the journal entries for forfeiture and reissue.
Answer Key:
Journal Entries

Question 12.
Nivetha Ltd. forfeited 1,000 equity shares of Rs. 10 each for non-payment of call of  

Rs. 4 per share. Of these 800 shares were reissued @ Rs. 7 per share. Pass journal entries for forfeiture and reissue.
Answer Key:
Journal Entries

Question 13.
Nathiya Textiles Ltd. forfeited 100 shares of Rs. 10 each, Rs. 8 called up, on which Mayuri had paid application and allotment money of Rs. 6 per share. Of these 75 shares were re-issued to Soundarya by receiving Rs. 7 per share. Pass journal entries for forfeiture and reissue.
Answer Key:

Question 14.
Simon Ltd issued 50,000 equity shares of Rs. 10 each at par payable on application  

Rs. 1 per share, on allotment Rs. 5 per share, on first call Rs. 2 per share, and on second and final call Rs. 2 per share. The issue was fully subscribed and all the amounts were duly received with the exception of 2,000 shares held by Chezhian, who failed to pay the second and final call. His shares were forfeited and reissued to Elango at Rs. 8 per share. Journalise the above transactions.
Journal Entries

Question 15.
Kanchana Ltd. issued 50,000 shares of Rs. 10 each payable as under.
On application – Rs. 1
On allotment – Rs. 5
On first call – Rs. 2
On final call – Rs. 2
Applications were received for 70,000 shares. Applications for 8,000 shares were rejected and allotment was made proportionately towards the remaining applications. The directors made both the calls and the all the amounts were received except the final call on 1,500 shares which were subsequently forfeited. Later 1,200 forfeited shares were reissued by receiving ₹ 8 per share. Give journal entries.
Answer Key:
Journal Entries

Question 16.
Viswanath Furniture Ltd. invited applications for 20,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable.
Rs. 2 on application
Rs. 5 (including premium) on allotment
Rs. 5 on first and final call
There were over subscription and applications were received for 30,000 shares and the excess applications were rejected by the directors. Pass the journal entries.
Answer Key:
Journal Entries

Question 17.
United Industries Ltd. issued shares of Rs. 10 each at 10% premium payable Rs. 3 on application, Rs. 4 on allotment (including premium), Rs. 2 on first call and Rs. 2 on final call.
Journalise the transactions relating to forfeiture of shares for the following situations: Manoj who holds 250 shares failed to pay the second and final call and his shares were forfeited. Manoj who holds 250 shares failed to pay the allotment money and first call and second and final call and his shares were forfeited. Manoj who holds 250 shares failed to pay the allotment money and first call money and his shares were forfeited after the first call.
Answer Key:
Journal Entries

 Question 18.
Kasthuri Ltd. had allotted 20,000 shares to applicants of 30,000 shares on a pro-rata basis. The amount payable was Rs. 1 on application, Rs. 5 on allotment (including premium of Rs. 2 each), and Rs. 2 on the first call and Rs. 2 on final calls. Subin, a shareholder failed to pay the first call and final call on his 500 shares. All the shares were forfeited and out of the 400 shares were re-issued @ Rs. 8 per share. Pass necessary journal entries.
Answer Key:
Journal Entries

Question 19.
Vairam Ltd. issued 60,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows:
On application Rs. 6
On allotment Rs. 4 (including premium)
On the first and final call Rs. 2
Issue was fully subscribed and the amounts due were received except Saritha to whom 1,000 shares were allotted who failed to pay the allotment money and first and final call money. Her shares were forfeited. All the forfeited shares were reissued to Parimala at Rs. 7 per share. Pass journal entries.
Answer Key:
Journal Entries 

Question 20.
Abdul Ltd. issues 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share. Pass journal entry if the amount is fully received along with a premium amount of Rs. 2 per share.
 Answer Key:

Question 21.
Paradise Ltd. purchased assets of Rs. 4,40,000 from Suguna Furniture Ltd. It issued equity shares of Rs. 10 each fully paid in satisfaction of their claim. What entries will be made if such issue is: (a) at par and (b) at a premium of 10%.
Answer Key:

Total Amount = RS 4,40,000 Face value of shares is 10.
Premium @ 10% = Premium amt Rs. 1.
Issue Price = Face Value + Securities Premium 10 + 1 = 11
$No. of Equity shares=\frac{Total amount}{Issue price}$

$=\frac{4,\mathrm{40,000}}{11}=\mathrm{40,000}shares$