{"id":12794,"date":"2024-03-24T01:45:40","date_gmt":"2024-03-23T20:15:40","guid":{"rendered":"https:\/\/gstguntur.com\/?p=12794"},"modified":"2024-03-25T17:44:45","modified_gmt":"2024-03-25T12:14:45","slug":"bonus-issue-and-right-issue-ca-inter-accounts-study-material","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/bonus-issue-and-right-issue-ca-inter-accounts-study-material\/","title":{"rendered":"Bonus Issue and Right Issue – CA Inter Accounts Study Material"},"content":{"rendered":"

Bonus Issue and Right Issue \u2013 CA Inter Accounts Study Material<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Bonus Issue and Right Issue \u2013 CA Inter Accounts Study Material<\/h2>\n

Theory Questions<\/strong><\/p>\n

Question 1.
\nFollowing is the extract of the Balance Sheet of X Ltd., a listed company as at March 31, 2012:
\n\"Bonus
\nOn April 30, 2012, the company decided to capitalize its reserves by way of Bonus shares issued at the rate of 1:4. Securities premium of \u20b9 2,00,000 includes a premium of \u20b9 40,000 for shares issued pursuant to a scheme of amalgamation. Capital reserve includes \u20b9 3,20,000 being profit on sale of plant and machinery. The balance amount of capital reserve has been created due to revaluation of land.
\nComment with reason on the following:
\n(i) Whether Revaluation Reserve can be capitalized?
\n(ii) How much amount of Capital reserve can be capitalized?
\n(iii) How much amount of \u2018Securities Premium A\/c\u2019 can be capitalized?
\n(iv) Number of equity shares to be issued by way of bonus as on 30th April, 2012. (RTP)
\nAnswer:
\n(i) As per SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
\n‘Reserves created by Revaluation of fixed assets cannot be capitalized for the purpose of issuing bonus shares.\u2019<\/p>\n

(ii) As per SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, ‘Capital Reserve\u2019 realized in cash can be utilized for issue of fully paid Bonus shares. Therefore, \u20b9 3,20,000 being profit on sale of plant, is a capital profit which has been realized in cash and can be utilized for issue of the bonus shares. For remaining balance in capital reserve account amounting \u20b9 2,80,000 (6,00,000-3,20,000) has been created due to revaluation of land. Since, the same has not been realised in cash it cannot be capitalized.<\/p>\n

(iii) As per SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, Securities Premium collected in cash only can be utilized for Bonus issue, therefore only \u20b9 1,60,000 (i.e. \u20b9 2,00,000 – \u20b9 40,000) can be utilized for Bonus issue.<\/p>\n

(iv) Number of equity shares to be issued as bonus shares 1,80,000 (7,20,000\/4) shares will be issued as bonus shares.<\/p>\n

\"Bonus<\/p>\n

Bonus Issue – Simple Problems<\/strong><\/p>\n

Question 2.
\nFollowing items appear in the Trial Balance of B Ltd. as on 31st March, 2017:
\n\"Bonus
\nThe company decided to issue to equity shareholders bonus shares at the rate of 1 share for every 3 shares held. Company decided that there should be the minimum reduction in free reserves. Pass necessary Journal Entries in the books Hello Ltd. (RTP)
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Question 3.
\nFollowing items appear in the Trial Balance of Saral Ltd. as on 31st March, 2014:
\n\"Bonus
\nThe company decided to issue to equity shareholders bonus shares at the rate of 1 share for every 3 shares held. Company decided that there should be the minimum reduction in free reserves. Pass necessary Journal Entries in the books Saral Ltd. (4 Marks) (May 2014)
\nAnswer:
\n\"Bonus<\/p>\n

\"Bonus<\/p>\n

Question 4.
\nFollowing are the balances appear in the trial balance of Arya Ltd. as at 31st March, 2018.
\n\"Bonus
\nOn 1st April, 2018 the company has made final call @ \u20b9 2 each on 1,00,000 Equity Shares. The call money was received by 15th April, 2018. Thereafter the company decided to issue bonus shares to equity shareholders at the rate of 1 share for every 5 shares held and for this purpose, it decided that there should be minimum reduction in free reserves. Pass Journal entries. (4 Marks) (May 2018)
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Question 5.
\nFollowing is the extract of the Balance Sheet of P Ltd. as at 31st March, 20X1
\n\"Bonus
\nOn 1st April, 20X1, the Company has made final call @ \u20b9 2 each on 2,70,000 equity shares. The call money was received by 20th April, 20X1. Thereafter, the company decided to capitalize its reserves by way of bonus at the rate of one share for every four shares held.<\/p>\n

You are required to prepare necessary journal entries in the books of the com pany and prepare the relevant extract of the balance sheet as on 30th April, 20X1 after bonus issue. (RTF)
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Balance Sheet [Extract] as at 30th April, 20X1 (after bonus issue)
\n\"Bonus<\/p>\n

\"Bonus<\/p>\n

Question 6.
\nFollowing is the extract of the Balance Sheet of X Ltd. as at 31st March, 2017
\n\"Bonus
\nOn 1st April, 2017, the Company has made final call @ \u20b9 2 each on 2,70,000 equity shares. The call money was received by 20th April, 2017. Thereafter, the company decided to capitalize its reserves by way of bonus at the rate of one share for every four shares held.<\/p>\n

Show necessary journal entries in the books of the company and prepare the extract of the balance sheet as on 30th April, 2017 after bonus issue. (RTP)
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Balance Sheet [Extract] as at 30th April, 2017 (after bonus issue)
\n\"Bonus<\/p>\n

\"Bonus<\/p>\n

Question 7.
\nThe following notes pertain to B Ltd.’s Balance Sheet as on 31st March, 20X1:
\n\"Bonus
\nOn 2nd April, 20X1, the company made the final call on equity shares @ \u20b9 2 per share. The entire money was received in the month of April, 20X1.<\/p>\n

On 1st June, 20X1, the company decided to issue to equity shareholders bonus shares at the rate of 2 shares for every 5 shares held.<\/p>\n

You are required to prepare journal entries for all the above-mentioned transactions. Also prepare the notes on Share Capital and Reserves and Surplus relevant to the Balance Sheet of the company immediately after the issue of bonus shares.
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Notes to Accounts:
\n\"Bonus<\/p>\n

\"Bonus<\/p>\n

Bonus Issue – Advanced Problems<\/strong><\/p>\n

Question 8.
\nThe following notes pertain to Brite Ltd\u2019s Balance Sheet as on 31st March, 2012:
\n\"Bonus
\nOn 2nd April, 2012, the company made the final call on equity shares @ \u20b9 2 per share. The entire money was received in the month of April, 2012.<\/p>\n

On 1st June, 2012, the company decided to issue to equity shareholders bonus shares at the rate of 2 shares for every 5 shares held and for this purpose, it decided to utilize the capital reserves to the maximum possible extent.<\/p>\n

Pass journal entries for all the above-mentioned transactions. Also prepare the notes on Share Capital and Reserves and Surplus relevant to the Balance Sheet of the company immediately after the issue of bonus shares. (8 Marks) (Nov. 2012)
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Notes to Accounts
\n\"Bonus
\nNotes:
\nCapital reserve and Securities premium have been assumed as realized in cash and hence can be used for issue of fully paid bonus shares.<\/p>\n

\"Bonus<\/p>\n

Question 9.
\nFollowing is the extract from the Balance Sheet of M\/s. Yahoo Ltd. as at 31st March, 2011:
\n\"Bonus
\nOn 1st April, 2011, the company has made a final call @ \u20b9 2.50 each on 1,80,000 equity shares. The call money was received by 30th April, 2011. Thereafter the company decided to capitalize its reserves by issuing bonus shares at the rate of one share for every three shares held. Securities premium of \u20b9 50,000 includes a premium of \u20b9 20,000 for shares issued to vendor for purchase of a special machinery. Capital reserve includes \u20b9 60,000 being profit on exchange of plant and machinery.<\/p>\n

Show necessary Journal Entries in the books of the company and prepare the extract of the Balance Sheet after bonus issue. Necessary assumption, if any, should form part of your answer. (Nov. 2011)
\nAnswer:
\nJournal Entries
\n\"Bonus<\/p>\n

Balance Sheet [Extract] (After bonus issue)
\n\"Bonus
\nAssumption:
\nIt is assumed that balance of capital reserve and securities premium is collected in cash only.<\/p>\n

\"Bonus<\/p>\n

Right Issue – Value of Right<\/strong><\/p>\n

Question 10.
\nA company offers new shares of X 100 each at 25% premium to existing shareholders on the basis one for five shares. The cum-right market price of a share is \u20b9 200.
\nYou are required to calculate the (i) Ex-right value of a share; (ii) Value of a right share? (RTP)
\nAnswer:
\nEx-right value of the shares
\n\"Bonus
\n= \u20b9 1,125\/6 shares
\n= \u20b9 187.50 per share.
\nValue of right = Cum-right value of the share – Ex-right value of the share
\n= \u20b9 200 – \u20b9 187.50 = \u20b9 12.50 per share.<\/p>\n

\"Bonus<\/p>\n

Question 11.
\nZeta Ltd. has decided to increase its existing share capital by making rights issue to its existing shareholders. Zeta Ltd. is offering one new share for every two shares held by the shareholder. The market value (cum-right) of the share is \u20b9 360 and the company is offering one right share of \u20b9 180 each to its existing shareholders. You are required to calculate the value of a right. What should be the ex-right value of a share? (RTP)
\nAnswer:
\nEx-right value of the shares
\n\"Bonus
\n= \u20b9 900\/3 shares
\n= \u20b9 300 per share.<\/p>\n

Value of right
\n= Cum-right value of the share – Ex-right value of the share
\n= \u20b9 360 – \u20b9 300 = \u20b9 60 per share.<\/p>\n

Conclusion:
\nThus, any one desirous of having a confirmed allotment of one share from the company at \u20b9 180 will have to pay \u20b9 120 (2 shares \u00d7 \u20b9 60) to an existing shareholder holding 2 shares and willing to renounce his right of buying one share in favour of that person.<\/p>\n

\"Bonus<\/p>\n

Question 12.
\nA company offers new shares of \u20b9 100 each at 25% premium to existing shareholders on one for four basis. The cum-right market price of a share is \u20b9 150. Calculate the value of a right. (RTP)
\nAnswer:
\n\"Bonus
\n= \u20b9 725\/5 shares
\n= \u20b9 145 per share.<\/p>\n

Value of right
\n= Cum-right value of the share – Ex-right value of the share
\n= \u20b9 150 – \u20b9 145
\n= \u20b9 5 per share.<\/p>\n

Mix Problems<\/strong><\/p>\n

Question 13.
\nThe following is the Balance Sheet of Bumbum Limited as at 31st March, 2009:
\n\"Bonus
\nIn Annual General Meeting held on 20th June, 2009 the company passed the following resolutions:<\/p>\n

    \n
  1. To split equity, share of ? 10 each into 5 equity shares of ? 2 each from 1st July, 2009.<\/li>\n
  2. To redeem 8% preference shares at a premium of 5%.<\/li>\n
  3. To redeem 9% Debentures by making offer to debenture holders to convert their holdings into equity shares at ? 10 per share or accept cash on redemption.<\/li>\n
  4. To issue fully paid bonus shares in the ratio of one equity share for every 3 shares held on record date.<\/li>\n<\/ol>\n

    On 10th July, 2009 investments were sold for? 5,55,000 and preference shares were redeemed.<\/p>\n

    40% of Debenture holders exercised their option on accept cash and their claims were settled on 1st August, 2009.<\/p>\n

    The company fixed 5th September, 2009 as record date and bonus issue was concluded by 12th September, 2009.<\/p>\n

    You are requested to journalize the above transactions including cash trans-actions and prepare Balance Sheet as at 30th September, 2009. All working notes should form part of your answer. (12 Marks) (Nov. 2010)
    \nAnswer:
    \nJournal Entries
    \n\"Bonus
    \n\"Bonus
    \n\"Bonus<\/p>\n

    Balance Sheet as at 30th September, 2009
    \n\"Bonus<\/p>\n

    Working Notes:
    \n\"Bonus
    \n\"Bonus<\/p>\n

    \"Bonus<\/p>\n

    Question 14.
    \nThe Balance Sheet of Dee Limited as on 31st March, 2009 was as follows:
    \nBalance Sheet as at 31st March, 2009
    \n\"Bonus
    \nAt the General Meeting it was resolved to:<\/p>\n

      \n
    1. Pay proposed dividend of 10% in cash.<\/li>\n
    2. Give existing shareholders the option to purchase one share of \u20b9 10 each at \u20b9 15 for every five shares held. This option was taken up by all the shareholders.<\/li>\n
    3. Redeem the debentures at a premium of 5% and also confer option to the debenture holders to convert 50% of their holding into equity shares at a predetermined price of \u20b9 15 per share and balance payment to be made in cash.<\/li>\n<\/ol>\n

      Holders of 3,000 debentures opted to get their debentures redeemed in cash only while the rest opted for getting the same converted into equity shares as per the terms of issue. Debenture redemption fund investment realized \u20b9 1,80,000 on sales.<\/p>\n

      You are required to redraft the Balance Sheet after giving effects to the right issue and redemption of debentures. Also show the calculations in respect of number of equity shares issued and cash payment. (16 Marks) (Nov 2009)
      \nAnswer:
      \nBalance Sheet as at 31st March, 2009
      \n\"Bonus<\/p>\n

      Computation of number of equity shares issued:
      \n\"Bonus<\/p>\n

      Cash payment to debenture holders:
      \n\"Bonus<\/p>\n

      Working Notes:
      \n1. Debenture Redemption Reserve A\/c
      \n\"Bonus<\/p>\n

      2. General Reserve A\/c
      \n\"Bonus<\/p>\n

      3. Computation of Securities Premium
      \n\"Bonus<\/p>\n

      4. Cash A\/c
      \n\"Bonus<\/p>\n

      \"Bonus<\/p>\n

      Question 15.
      \nExtra Ltd. furnishes you with the following Balance Sheet as on 31st March, 2010: (16 Marks) (Nov. 2010)
      \n\"Bonus<\/p>\n

        \n
      1. The company redeemed the preference shares at a premium of 10% on 1st April, 2010.<\/li>\n
      2. \u00a0It also bought back 3 lakhs equity shares of \u20b9 10 each at \u20b9 30 per share. The payment for the above were made out of huge bank balances, which appeared as a part of the current assets,<\/li>\n
      3. Included in its investment were \u2018investments in own debentures\u2019 costing \u20b9 2 lakhs (face value \u20b9 2.20 lakhs). These debentures were cancelled on 1st April, 2010.<\/li>\n
      4. The company had 1,00,000 equity stock options outstanding on the above-mentioned date, to the employees at \u20b9 20 when the market price was \u20b9 30. (This was included under current liabilities). On 1.04.2010 employees exercised their options for 50,000 shares.<\/li>\n
      5. Pass the journal entries to record the above.<\/li>\n
      6. Prepare Balance Sheet as at 01.04.2010.<\/li>\n<\/ol>\n

        Answer:
        \n\"Bonus
        \n\"Bonus
        \n\"Bonus<\/p>\n

        Balance Sheet as on 01.04.2010
        \n\"Bonus<\/p>\n

        \"Bonus<\/p>\n

        Working Notes:
        \n\"Bonus
        \n\"Bonus<\/p>\n","protected":false},"excerpt":{"rendered":"

        Bonus Issue and Right Issue \u2013 CA Inter Accounts Study Material is designed strictly as per the latest syllabus and exam pattern. Bonus Issue and Right Issue \u2013 CA Inter Accounts Study Material Theory Questions Question 1. Following is the extract of the Balance Sheet of X Ltd., a listed company as at March 31, …<\/p>\n

        Bonus Issue and Right Issue – CA Inter Accounts Study Material<\/span> Read More »<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[167],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/12794"}],"collection":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/comments?post=12794"}],"version-history":[{"count":1,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/12794\/revisions"}],"predecessor-version":[{"id":12899,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/12794\/revisions\/12899"}],"wp:attachment":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/media?parent=12794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/categories?post=12794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/tags?post=12794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}