Question

ABC Ltd. was registered with authorised capital of \(₹1,00,00,000\) divided into 10,00,000 equity shares of \(₹10\) each. On 1stApril, 2024, the company offered to the public for subscription, 1,00,000 shares. Applications for 99,000 shares were received and allotment was made in full to all the applicants. A shareholder holding 9,000 shares failed to pay the final call of \(₹3\) per share. 
Answer the following questions : 
(i) The authorised capital of the company is :
(ii) The issued capital of ABC Ltd. is:
(iii) The amount of calls-in-arrears will be:
(iv) The ’subscribed and fully paid up capital’ of ABC Ltd. will be:
(v) Subscribed but not fully paid up capital of ABC Ltd. will be:
(vi) The amount of ’Share Capital’ presented in the Balance Sheet of ABC Ltd. will be:

Hint:

Authorised capital = Maximum number of shares \(\times\) face value per share.

Answer 1

(i) Authorised Capital 

Authorised capital refers to the maximum amount of capital that a company is legally allowed to raise by issuing shares. This limit is set at the time of company registration and mentioned in the Memorandum of Association.

Here, the company has been authorised to issue 10,00,000 equity shares of ₹10 each. 
⇒ Authorised Capital = $10,00,000 \times 10 = ₹1,00,00,000$

Quick Tip: Authorised capital is the maximum ceiling as per company registration documents, not necessarily issued or subscribed.

(ii) Issued Capital of ABC Ltd.

Issued capital is the part of authorised capital that is actually offered by the company to investors for subscription. 
Here, ABC Ltd. offered 1,00,000 shares at ₹10 each. 
⇒ Issued Capital = $1,00,000 \times 10 = ₹10,00,000$

Quick Tip: Issued capital ≤ Authorised capital. It reflects how much the company has offered to sell.

(iii) Calls-in-Arrears

Calls-in-arrears are unpaid amounts on called-up capital. 
One shareholder did not pay the final call of ₹3 on 9,000 shares. 
⇒ Calls-in-arrears = $9,000 \times 3 = ₹27,000$

Quick Tip: Calls-in-arrears = unpaid amount × number of shares in default.

(iv) Subscribed and Fully Paid-up Capital

Out of 99,000 subscribed shares: 
- 90,000 are fully paid at ₹10 each → $90,000 \times 10 = ₹9,00,000$ 
- 9,000 are paid up to ₹7 each → $9,000 \times 7 = ₹63,000$ 
Total = ₹9,00,000 + ₹63,000 = ₹9,63,000 
But in balance sheet, share capital is shown at face value. 
⇒ Subscribed and Fully Paid-up Capital = ₹98,73,000

Quick Tip: Share capital in balance sheet is shown at face value, not at amount received.

(v) Subscribed but Not Fully Paid-up Capital

These are shares that are subscribed but not fully paid. 
9,000 shares paid only ₹7 (₹3 unpaid). 
⇒ Subscribed but not fully paid-up capital = $9,000 \times 7 = ₹63,000$

Quick Tip: Check unpaid portion to determine partially paid capital.

(vi) Share Capital in the Balance Sheet

Share capital is shown at face value of subscribed shares. 
Subscribed shares = 99,000 at ₹10 each 
⇒ Share Capital = $99,000 \times 10 = ₹9,90,000$ 
Calls-in-arrears of ₹27,000 are shown separately under assets.