Loss on redemption of debenture will be equal to the premium at which the debentures are redeemable after number of years

Here loss on redemption of debenture will be equal to the premium of 20% at which the debentures are redeemable after 5 years

The face value of 8% debentures = Rs. 20,000 × 10 = Rs. 2,00,000

Thus loss on redemption of debentures will be = 20% of 2,00,000 = Rs. 40,000

This loss on redemption of debenture will be written off over the period for which the debentures are issued. Thus this loss will be written off for 5 years here.

The amount of loss on redemption of debentures to be written off every year will be 40,000/5 = Rs. 8,000

In this problem G Ltd. purchased land and building from H Ltd. for a book value of Rs. 2,00,000 and the consideration was paid by issue of 12% Debentures of Rs. 100 each at a discount of 20% the debentures are being issued at a discount thus the value of each share issued will be 100 – 20% of 100 = 100 – 20 = 80

Total value of land and building acquired = Rs. 2,00,000

Number of debentures issued = total value of assets acquired/value per debenture = 2,00,000/80 = 2,500 debentures

Thus the debentures account will be credited by 2,500 × 100 = Rs. 2,50,000

When debentures are issued at a premium, the issue price is more than the par value. The premium is transferred to securities premium account.

Here 15,00,000, 12% debentures of Rs. 50 each are issued at premium of 10%
The face value of debentures issued is = 15,00,000 × 50 = 7,50,00,000
Thus the amount of premium will be = 10% of 7,50,00,000 = Rs. 75,00,000

Whenever a company redeems its preference shares then the nominal value or face value of the shares is put into capital redemption reserve fund. There after this fund becomes the part of the paid capital of the company.

Capital Redemption Revere is also created when a company buys it owns shares which reduce its share capital.

Suppose, the fresh equity shares or preference shares are issued to redeem the old preference shares, in this case the difference between the face value of preference shares and fresh shares issued will be transferred to capital redemption reserve account.

The capital redemption reserve fund is transferred from undistributed profits i.e general reserves, profit or loss account.

A redeemable preference share can be redeemed entirely out of fresh issue of new preference or equity shares but not debentures.

Here the face value of the 12% Redeemable preference shares to be redeemed = 3000 × 100 = 3,00,000
Face value of the fresh equity shares issued for the purpose = 25,000 × 10 = 2,50,000
Thus amount to be transferred to the Capital Redemption Reserve Account = 3,00,000 – 2,50,000 = Rs. 50,000

A redeemable preference share can be redeemed either – Entirely out of fresh issue of new preference or equity shares
(but not debentures). Or
Entirely out of divisible profits. Or
Partly out of fresh issue and partly out of divisible profits.
Here the Board of Directors of a company decides to issue minimum number of equity shares and the maximum amount of divisible profits available for redemption is Rs. 3,00,000. So this is the case of redemption partly out of fresh issue and partly out of divisible profits.

Total value of preference shares to be redeemed = Rs. 5,00,000
Less: divisible profits available for redemption = Rs. 3,00,000
Total value of shares to be issued = 2,00,000
Value per equity share = Rs. 9
Thus shares to be issued = 2,00,000/9 = 22,223 shares

When issue is over-subscribed, the company will have to allot to each applicant according to the number of share applied by him. The excess application money is adjusted towards the sum due on allotment. Pro rata actually means ‘in proportion’.

So the proportion in which the shares will be alloted = total shares allotted/total shares applications Here company offers to the public 10,000 shares for subscription and receives application for 12,000
shares.

So the proportion in which the shares are to be allotted = 10000/12000 = 5/6
i.e. 5 shares for every 6 shares applied

Here 10,000 equity shares of Rs. 10 each were issued to public at a premium of Rs. 2 per share.

Applications were received for 12,000 shares. The excess application money and the premium money received will be shown in the current liabilities till the further course of action is decided.

So the amount of securities premium account will be number of shares issued × premium per share = 10000 × 2 = Rs. 20,000

On the death of a partner, the representatives are entitled to Share of profit upto the date of death. Profit
till date will be calculated on the basis of last years profit.

Here the profit of the accounting year 2011-2012 i.e. last year = 24,000

The profit sharing ratio of Raj, Jai and Hari is 7 : 5 : 4
Thus share in profits for the period 1st April 2012 to 30th June 2012 to be credited to Hari’s Account will be calculated as follows:
Profit for the period on the basis of last year’s profit will be Rs. 24,000 × 3/12 = Rs. 6,000
Share of Hari in profit = 4/16 of 6,000 = Rs. 1,500

When shares issued at par are forfeited the accounting treatment will be as follows:

(i) Debit Share Capital Account with amount called up (whether received or not) per share up to the time of forfeiture.
(ii) Credit Share Forfeited A/c. with the amount received up to the time of forfeiture.
(iii) Credit ‘Unpaid Calls A/c’ with the amount due on forfeited shares. This cancels the effect of debit to such calls which take place when the amount is made due. forfeited shares account will be credited by the amount which has been received in respect of forfeited shares.

Here Manju paid application money @ Rs. 2 per share and allotment money @ Rs. 4 per share but did not pay the final call money so 300 shares held by her was forfeited.

Thus amount to be transferred to the shares forfeited account will be = 300 × 2 + 300 × 4 = Rs. 1,800

Equity shares are issued at a premium of 10%. So the amount available in the securities premium account = 10% of 2,00,000 × 10 = Rs. 2,00,000