In this post you will get Buy Back of Shares Problems and Solutions for BCOM 2nd SEM CBCS Pattern. We will try to included all the practical problems asked in:
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Buy Back of Shares Problems and Solutions
2022: 3. (a) Equity Liabilities and Assets of Sunrise Ltd. as on 31st March, 2019 are given below:
|
 |
Rs. |
|
I. Equity and Liabilities:   1. Shareholders’ Fund:     (a) Share Capital: 8,00,000 Equity Shares of Rs. 10 each.     (b) Reserve and Surplus:        (i) Securities Premium A/c        (ii) General Reserve   2. Non-Current Liabilities:     Secured Loan: 13% Debentures   3. Current Liabilities |
  80,00,000  8,00,000 72,00,000  40,00,000 40,00,000 |
|
 |
2,40,00,000 |
|
II. Assets:   1. Non-Current Assets: Fixed Assets   2. Current Assets:     (a) Stock-in-Trade     (b) Sundry Debtors     (c) Bank Balance |
 80,00,000  48,00,000 40,00,000 72,00,000 |
|
 |
2,40,00,000 |
It was decided at the meeting of shareholders –
(1) to buyback 20% of equity shares @ Rs. 12 per share;
(2) to utilize general reserve for buyback of shares;
(3) to utilize securities premium reserve for premium payable on buyback of shares.
Pass necessary journal entries and draw up the Balance Sheet after the above transactions have been given effect to.
Journal Entries
In the Books of Sunrise Ltd
|
Date |
Particulars |
L/F |
Dr. (Rs.) |
Cr. (Rs.) |
|
2019 March 31 |
General Reserve                        Dr. To Capital Redemption Reserve A/c (Being shares of nominal values of Rs. 16,00,000 bought back out of general reserve; amount provided thus to the extent of nominal value of shares transferred to Capital Redemption Reserve A/c as per provision of Section 69 of the Companies Act, 2013.) |
|
16,00,000 |
– 16,00,000- |
|
|
Equity Share Capital A/c               Dr. Securities Premium A/c                Dr. To Shareholders A/c (Being amount due on buyback of 4,00,000 shares of Rs. 10 each at a premium of Rs. 2 per share) |
|
16,00,000 3,20,000 |
– – 19,20,000 |
|
|
Shareholders A/c                      Dr. To Bank A/c (Being amount paid for buyback of 4,00,000 shares of Rs. 10 each @ Rs. 12 per share) |
|
19,20,000 |
– 19,20,000 |
BALANCE SHEET OF Sunrise Ltd
As at 31st March, 2019
|
I. Equity and Liabilities (1) Shareholders’ Funds:    (a) Share Capital    (b) Reserves and Surplus |
Note No. 1 |
64,00,000 76,80,000 |
|
Shareholders’ Funds |
|
1,40,80,000 |
|
(2) Non-Current Liabilities: Â Â Â Secured Loan: 13% Debentures (3) Current Liabilities |
|
– 40,00,000 40,00,000 |
|
Total Equity and Liabilities (1) + (2) + (3) |
|
2,20,80,000 |
|
II. Assets: (1) Non-current Assets: Â Â Â Fixed Assets |
|
– – 80,00,000 |
|
(2) Current Assets    Inventory (Stock in Trade)    Trade Receivables (Debtors)    Cash and Cash Equivalents |
|
– 48,00,000 40,00,000 52,80,000 |
|
|
|
1,40,80,000 |
|
Total Assets (1) + (2) |
|
2,20,80,000 |
Notes to Accounts
|
1. Share Capital Paid up Share Capital 6,40,000 Equity Shares of Rs. 10 each fully paid |
Rs. 64,00,000 |
|
2. Reserves and Surplus Capital Redemption Reserve Securities Premium A/c General Reserve |
16,00,000 4,80,000 56,00,000 |
|
 |
76,80,000 |
(2017 Old Course) Liabilities and Assets of X Ltd. as on 31st March, 2016 are given below:
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Paid-up Share Capital: 2000000 Equity Shares of Rs. 10 Security Premium Reserve General Reserve 14% Redeemable Debentures Current Liabilities |
 2,00,00,000 20,00,000 1,80,00,000 1,00,00,000 1,00,00,000 |
Freehold Property Stock-in-Trade Sundry Debtors Bank Balance |
2,00,00,000 1,20,00,000 1,00,00,000 1,80,00,000 |
|
 |
6,00,00,000 |
 |
6,00,00,000 |
It was resolved in the meeting of shareholders:
1. To buyback 20% of Equity Shares @ Rs. 12 per share.
2. To utilize General Reserve for buyback of shares.
3. To utilize securities premium for premium on buyback of shares.
4. To immediately cancel the shares bought back.
Pass Journal Entries and draw up the Balance Sheet after the above transactions have been given effect to. 6+5=11
Journal Entries
In the Books of X Ltd
|
Date |
Particulars |
L/F |
Dr. (Rs.) |
Cr. (Rs.) |
|
2019 March 31 |
General Reserve                    Dr. To Capital Redemption Reserve A/c (Being shares of nominal values of Rs. 40,00,000 bought back out of general reserve; amount provided thus to the extent of nominal value of shares transferred to Capital Redemption Reserve A/c as per provision of Section 69 of the Companies Act, 2013.) |
|
40,00,000 |
– 40,00,000 |
|
|
Equity Share Capital A/c            Dr. Securities Premium A/c             Dr. To Shareholders A/c (Being amount due on buyback of 4,00,000 shares of Rs. 10 each at a premium of Rs. 2 per share) |
|
40,00,000 8,00,000 |
– – 48,00,000 |
|
|
Shareholders A/c                   Dr. To Bank A/c (Being amount paid for buyback of 4,00,000 shares of Rs. 10 each @ Rs. 12 per share) |
|
48,00,000 |
– 48,00,000 |
BALANCE SHEET OF X LTD.
As at 31st March, 2019
|
I. Equity and Liabilities (1) Shareholders’ Funds:    (a) Share Capital    (b) Reserves and Surplus |
Note No. 1 |
– – 1,60,00,000 1,92,00,000 |
|
Shareholders’ Funds |
|
3,52,00,000 |
|
(2) Non-Current Liabilities: Â Â Â 14% Debentures (3) Current Liabilities |
|
– 1,00,00,000 1,00,00,000 |
|
Total Equity and Liabilities (1) + (2) + (3) |
|
5,52,00,000 |
|
II. Assets: (1) Non-current Assets: Â Â Â Fixed Assets: Freehold Property |
|
– – 2,00,00,000 |
|
(2) Current Assets    Inventory (Stock in Trade)    Trade Receivables (Debtors)    Cash and Cash Equivalents |
|
– 1,20,00,000 1,00,00,000 1,32,00,000 |
|
|
|
3,52,00,000 |
|
Total Assets (1) + (2) |
|
5,52,00,000 |
Notes to Accounts
|
1. Share Capital Paid up Share Capital 16,00,000 Equity Shares of Rs. 10 each fully paid |
Rs. 1,60,00,000 |
|
2. Reserves and Surplus Capital Redemption Reserve Securities Premium A/c General Reserve |
40,00,000 12,00,000 1,40,00,000 |
|
 |
1,92,00,000 |
(2019) Equity & Liabilities and Assets of X Ltd. as on 31st March, 2019 are given below:
|
 (Rs.) |
|
|
I.Equity and Liabilities:   1.Share Capital:     20,00,000 Equity Shares of Rs. 10 each fully paid  Reserves & Surplus:     Security Premium     General Reserve  Secured Loan:     14% Redeemable Debentures Current Liabilities |
–Â –Â 2,00,00,000 Â 20,00,000 1,80,00,000 Â 1,00,00,000 1,00,00,000 |
|
6,00,00,000 |
|
|
II.Assets: Fixed Assets:Freehold Property Current Assets:    Stock-in-trade    Sundry Debtors    Bank Balance |
 2,00,00,000  1,20,00,000 1,00,00,000 1,80,00,000 |
|
6,00,00,000 |
It was resolved in the meeting of shareholders:
a) To buyback 20% of Equity Shares @ Rs. 12 per share.
b) To utilize General Reserve for buyback of shares.
c) To utilize security premium for premium on buyback of shares.
d) To immediately cancel the shares bought back.
Journal Entries
In the Books of X Ltd
|
Date |
Particulars |
L/F |
Dr. (Rs.) |
Cr. (Rs.) |
|
2019 March 31 |
General Reserve                         Dr. To Capital Redemption Reserve A/c (Being shares of nominal values of Rs. 40,00,000 bought back out of general reserve; amount provided thus to the extent of nominal value of shares transferred to Capital Redemption Reserve A/c as per provision of Section 69 of the Companies Act, 2013.) |
|
40,00,000 |
– 40,00,000 |
|
|
Equity Share Capital A/c                 Dr. Securities Premium A/c                  Dr. To Shareholders A/c (Being amount due on buyback of 4,00,000 shares of Rs. 10 each at a premium of Rs. 2 per share) |
|
40,00,000 8,00,000 |
– – 48,00,000 |
|
|
Shareholders A/c                        Dr. To Bank A/c (Being amount paid for buyback of 4,00,000 shares of Rs. 10 each @ Rs. 12 per share) |
|
48,00,000 |
– 48,00,000 |
BALANCE SHEET OF X LTD.
As at 31st March, 2019
|
I. Equity and Liabilities (1) Shareholders’ Funds:    (a) Share Capital    (b) Reserves and Surplus |
Note No. 1 |
– – 1,60,00,000 1,92,00,000 |
|
Shareholders’ Funds |
|
3,52,00,000 |
|
(2) Non-Current Liabilities: Â Â Â 14% Debentures (3) Current Liabilities |
|
– 1,00,00,000 1,00,00,000 |
|
Total Equity and Liabilities (1) + (2) + (3) |
|
5,52,00,000 |
|
II. Assets: (1) Non-current Assets: Â Â Â Fixed Assets: Freehold Property |
|
– – 2,00,00,000 |
|
(2) Current Assets    Inventory (Stock in Trade)    Trade Receivables (Debtors)    Cash and Cash Equivalents |
|
– 1,20,00,000 1,00,00,000 1,32,00,000 |
|
|
|
3,52,00,000 |
|
Total Assets (1) + (2) |
|
5,52,00,000 |
Notes to Accounts
|
1. Share Capital Paid up Share Capital 16,00,000 Equity Shares of Rs. 10 each fully paid |
Rs. 1,60,00,000 |
|
2. Reserves and Surplus Capital Redemption Reserve Securities Premium A/c General Reserve |
40,00,000 12,00,000 1,40,00,000 |
|
 |
1,92,00,000 |
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