Question

Following is the extract of the Balance Sheet of Vikalp Ltd. as per Schedule-III, Part-I of Companies Act as at 31st March, 2024 along with Notes to accounts:
% [Balance Sheet Extract & Notes shown in Question] Notes to accounts' as at 31st March, 2023 \& 2024 show changes in Share Capital.
Analysis from Notes:
As at 31-3-2023: Issued \& Subscribed Capital: 5,00,000 equity shares of Rs 10 each, fully paid up = Rs 50,00,000.
As at 31-3-2024: Issued Capital: 6,00,000 equity shares of Rs 10 each. Subscribed: 5,80,000 shares fully paid up (Rs 58,00,000) + 20,000 shares fully called up (Rs 2,00,000) less Calls in Arrears (Rs 40,000 on 20,000 shares @ Rs 2) = Rs 1,60,000. Total Subscribed = Rs 59,60,000.
Answer the following questions :
(i) The total face value of equity shares issued during the year 2023-2024 was:

Hint:

Carefully analyze the Share Capital note in comparative balance sheets. - Issued Capital Change = New Issue face value. - Calls in Arrears indicates unpaid called-up amount. - Forfeiture: Share Capital Dr (Called-up), To Forfeiture Cr (Paid amount), To Arrears Cr (Unpaid amount). - Reissue: Capital Reserve Cr = (Amount Forfeited per share - Discount on Reissue per share) * No. of shares reissued. - Min Reissue Price = Called-up - Amount Forfeited. At min price, Capital Reserve is NIL.

Answer 1

(i) Face value of shares issued during 2023-24:
Issued shares at 31-3-24 = 6,00,000 shares. Issued shares at 31-3-23 = 5,00,000 shares.
Increase in issued shares = 6,00,000 - 5,00,000 = 1,00,000 shares.
Face value of shares issued = 1,00,000 shares \( \times \) Rs 10/share = Rs 10,00,000.
Correct Answer: (A) Rs 10,00,000
(ii) Number of shares with calls in arrears:
The Note for 31-3-2024 explicitly mentions "Less: calls in arrears 20,000 equity shares @ Rs 2 per share".
Number of shares = 20,000.
Correct Answer: (D) 20,000
(iii) Debit to Share Capital on Forfeiture:
Shares forfeited = 20,000 shares.
Called-up amount per share = Rs 10 (stated as fully called up in the Note).
Debit to Share Capital = No. of shares forfeited \( \times \) Called-up amount per share
Debit = 20,000 \( \times \) Rs 10 = Rs 2,00,000.
Correct Answer: (C) Rs 2,00,000
(iv) Credit to Share Forfeiture Account:
Amount paid per share = Called-up amount - Amount in arrears
Amount paid = Rs 10 - Rs 2 = Rs 8 per share.
Credit to Share Forfeiture = No. of shares forfeited \( \times \) Amount paid per share
Credit = 20,000 \( \times \) Rs 8 = Rs 1,60,000.
Correct Answer: (A) Rs 1,60,000
(v) Capital Reserve on Reissue at Rs 8 fully paid up:
Shares reissued = 20,000. Reissue price = Rs 8. Fully paid up = Rs 10.
Discount on reissue = Paid-up Value - Reissue Price = Rs 10 - Rs 8 = Rs 2 per share.
Amount forfeited per share = Rs 8.
Gain per share transferred to Capital Reserve = Amount Forfeited - Discount on Reissue
Gain per share = Rs 8 - Rs 2 = Rs 6.
Total Capital Reserve = Gain per share \( \times \) No. of shares reissued
Total Capital Reserve = Rs 6 \( \times \) 20,000 = Rs 1,20,000.
Correct Answer: (D) Rs 1,20,000
(vi) Capital Reserve on Reissue at Minimum Price:
Amount forfeited per share = Rs 8.
Maximum permissible discount = Amount forfeited = Rs 8 per share.
Minimum reissue price = Called-up Value - Maximum Discount
Minimum reissue price = Rs 10 - Rs 8 = Rs 2 per share.
If reissued at minimum price (Rs 2), the discount allowed (Rs 8) equals the amount forfeited (Rs 8).
Gain per share transferred to Capital Reserve = Amount Forfeited - Discount on Reissue
Gain per share = Rs 8 - Rs 8 = Rs 0.
Total Capital Reserve = Rs 0.
Correct Answer: (D) NIL