The following is the abstract of Balance Sheet of Happy Ltd. as on 31st March, 2024: Issued and paid-up capital 90,000 Equity shares of 10 each ful...

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The following is the abstract of Balance Sheet of Happy Ltd. as on 31st March, 2024: Issued and paid-up capital 90,000 Equity shares of 10 each fully paid-up Less: Calls-in-arrear (10, 000 Equity shares of 2 each) 40,000 Equity shares of ₹ 10 each, 4 cash paid-up Reserves and Surplus: Capital Reserve (realized in cash) Capital Redemption Reserves Securities Premium General Reserve Profit and Loss Account 9,00,000 20,000 8,80,000 1,60,000 60,000 1,60,000 1,00,000 1,20,000 7,00,000 On 1st April, 2024, the company makes final call @ 6 each on 40,000 equity shares. The call money is duly received by 30th April, 2024. On 1st May, 2024, the Board of Directors of the company decided: (i) To forfeit the share on which final call of 2 each is due; (ii) To re-issue the forfeited share @ ₹ 11 each as fully paid up; (iii) To issue fully paid bonus shares in the ratio of one fully paid bonus share for every two fully paid shares held; and (iv) To use minimum balance of Profit and Loss Account. Pass necessary journal entries in the books of the company on the basis of the above decisions. [June 2024, 10 Marks]

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Option : Correct Option. Solution: In the books of Happy Ltd. Journal Entries Date Particulars L.F. Amount (Dr.) Amount (Cr.) 2024 April 1 Equity Share Final A/ c Dr. To Equity Share Capital A/c [40000 X 6] (Being final call money made due on 40,000 shares of 10 each @ 6 per share) 2,40,000 2,40,000 Bank A/c Dr. To Equity Share Final Call A/ c (Being final call money received) 2,40,000 2,40,000 May 1 Equity Share Capital A/ c Dr. To Share Forfeiture A/c [10000 X 8] To Call- in- Arrears A/ c [10000 X 2] (Being 10,000 shares of 10 each forfeited) 1,00,000 80,000 20,000 Bank A/c [10000 X 11] Dr. To Equity Share Capital A/ c [10000 X 10] To Securities Premium A/c [10000 X 1] (Being shares re-issued @ 11 per share) 1,10,000 1,00,000 10,000 Share forfeiture A/ c Dr. To Capital Reserve A/ c (Being balance in share forfeiture a/ c transferred to capital reserve a/ c) 80,000 80,000 Capital Redemption Reserve A/ c. Dr. Securities Premium A/ c Dr. Capital Reserve A/ c [60000 + 80000] Dr. General Reserve A/ c Dr. Profit & Loss A/ c Dr. To Bonus to Shareholder's A/ c [65000 X 10] (Being bonus share issued in ratio of l:2) 1,60,000 1,10,000 1,40,000 1,20,000 1,20,000 6,50,000 Bonus to Shareholder's A/ c Dr. To Equity Share Capital A/ c (Being capitalization of profit) 6,50,000 6,50,000 Working Note: No. of Shares entitled for bonus issue = 90,000 sh. + 40,000 sh = 1,30,000 Shares Bonus shares issued in the Ratio 1:2 =1,30,000 / 2 = 65,000 Shares

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