IAT Practice Sheets

Share Capital (Part-1)

 

  1. Give the definition of ‘Share’. [1]
  2. What are Preference Shares? [1]
  3. What is Reserve Capital? [1]
  4. What is meant by ‘Authorized’ or ‘Registered’ Capital? [1]
  5. What are Preliminary Expenses? [1]
  6. Can a company issue share at 6% premium in its Initial Public Offer (IPO)? Give reason.[1]
  7. What is meant by Capital Reserve? [1]
  8. What is meant by Private Placement of Shares? [1]
  9. What is meant by Oversubscription of shares? [1]
  10. Give any two alternatives available to a company for the allotment of shares in case of over subscription.[1]
  11. What is meant by Forfeiture of Shares? [1]
  12. What is the main difference between oversubscription and undersubscription of shares?[1]
  13. What is meant by Buy back of Shares? [1]
  14. Identify the purpose of utilizing the Securities premium that would maximise the return to shareholders.[1]

 

  1. IAT Limited wants to issue 2,00,000 Equity Shares of Rs.100 each at a premium. State clearly the conditions which should be fulfilled by the company to issue these shares.[3]

 

  1. IAT Limited has paid up capital of Rs.30,00,000 and a balance of Rs.7,50,000 in the

Securities premium Account. The company management do not want to carry over this balance. State the purpose for which this balance can be utilised.[3]

 

  1. (Issued at Par) IAT Limited issued 10,000 Equity Shares at the rate of 10 each

payable as follows:

On Application……………………………… Rs.3

On Allotment………………………………… Rs.4

On 1st Call……………………………………… Rs.2

On 2nd Call…………………………………….. Rs.1

Company paid Rs.10,000 as shares issue expenses. Give necessary journal entries [3]

 

  1. (Issued at Premium) IAT Limited issued 8,000 equity shares at Rs.10 each at a

premium of Rs.5 per share payable as follows:

On Application………………………………. Rs.5 (Including premium Rs.2)

On Allotment…………………………………. Rs.6 (including premium Rs.2)

On 1st Call……………………………………….. Rs.3 (including premium Re.1)

Remaining Balance………………………. on 2nd call

IAT Limited paid Rs.5,000 expenses on issue of shares. Give entries.

 

  1. (Lump sum payment at Par) IAT Limited issued 8,000 equity shares @ 10 each. All amounts have been received in lump sum. Share issued expenses were Rs.1,000. Give necessary journal entries. (3)

 

  1. (Lump sum payment at Premium) IAT Limited issued 6,000 Equity Shares @10 each @ 5% Premium. All amounts have been received in lump sum. Share issued expenses were Rs.500. Give necessary journal entries. (3)

 

  1. (Lump sum payment at Premium) IAT Limited issued 15,000 Equity Shares @10

each at a premium of 20%. All amounts have been received in Lump sum. Share issued expenses were Rs.1,000. Give necessary journal entries. (3)

 

  1. (Subscription less than 90%) IAT Limited issued 10,000 Equity Shares @ 10 each at a premium of 30%. Payable as follows:

On Application…………………………. Rs.5

On Allotment…………………………… Rs.4

Balance…………………………………….. on first Call

Applications were received for 8,000 shares. Give necessary journal entries.

 

Oversubscription (Case–1 when all excess applications are rejected)

 

  1. IAT Limited issued 8,000 Equity shares @ 10 each payable as follows:

Application…………………………. Rs.4

Allotment……………………………. Rs.5

Balance……………………………….. on first and final call

Applications were received for 10,000 Equity shares. All excess applications were

rejected and money was returned to the applicants. Give journal entries.[3]

 

  1. IAT Limited issued 15,000 Equity shares @ 10 each at a premium of 50%. Payable as

follows:

Application……………………………….. Rs.6 (including premium Rs.2)

Allotment………………………………….. Rs.5 (including premium Rs.2)

Balance……………………………………… on first & final call with remaining premium amount.

Applications were received for 18,000 Equity shares. All excess applications were

rejected and money was returned to the applicants. Share issue expenses were

Rs.4,000. Give journal entries.[3]

 

  1. IAT Limited issued 12,000 equity shares @10 each at a maximum premium payable as follows:

Application……………………………….. Rs.4

Allotment………………………………….. Rs.3

Balance……………………………………… on 1st Call

Applications were received for 14,000 shares. All excess applications were rejected

and money was returned to the applicants. Share issue expenses were Rs.2,000. Give

journal entries.

 

  1. IAT Limited issued 6,000 Equity Shares @10 each. Applications received for 8,000

shares. All excess applications were rejected and money was returned to the

applicants. All amounts have been received on application only. Give necessary entries. (3)

 

  1. IAT Limited issued 10,000 equity shares @10 each at a premium of 20%. Applications received for 12,000 shares. Excess applications were rejected and money was refunded to the applicants. Share issue expenses were Rs.800. Give necessary entries. (3)

 

 

  1. IAT Limited issued 7,000 Equity shares @10 each at a maximum premium. Applications received for 8,000 shares. All excess applications were rejected and money refunded. All amounts have been received on application. Share issue expenses were Rs.400. Give entries. (3)

 

CASE -2 WHEN ALL EXCESS APPLICATIONS ARE ACCEPTED

 

  1. IAT Limited issued 10,000 Equity shares @ 10 each payable as follows:

Application……………………… Rs.2.50

Allotment………………………… Rs.4.50

Balance……………………………. on first and final call

Applications were received for 12,500 Equity shares. Pro-rata allotment was made to all the applicants. Excess money received on application was utilized on allotment

only. Give journal entries. (3)

 

  1. IAT Limited issued 12,000 Equity shares @ 10 each at a premium of 20%, payable as

follows:

Application…………………………… Rs.6 (including premium Rs.2)

Allotment……………………………… Rs. 4

Balance…………………………………. on first and final call

Applications were received for 15,000 Equity shares. Pro-rata allotment was made to all the applicants. Excess money received on application was utilized on allotment

only. Give journal entries. (3)

 

  1. IAT Limited issued 8,000 Equity shares @ 10 each at a Premium of 10%, payable as

follows:

Application………………………… Rs.3

Allotment………………………….. Rs. 4

Balance………………………………. on first and final call

Applications were received for 12,000 Equity shares. Pro-rata allotment was made to all the applicants. Excess money received on application was utilized on allotment

only. Give journal entries.

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By Ravi Kashyap

Commerce Expert

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