Company Accounts

Authorised Capital, i.e maximum amount a company can raise in its lifetime is to be mentioned in the Capital Clause of the Memorandum of Association.

Since a comapny is not a human being, its official stamp is considered as its signature. hence, common seal means the signature of the comapny.

According to Section 55, no company, limited by shares, shall issue irredeemable preference shares or preference shares redeemable after the expiry of 20 years from the date of issue. However, a Company may issue preference shares redeemable after 20 years for such infrastructure projects as may be specified, under the Companies Act, 2013.

As per Section 65 of the Companies Act, 2013, a Company may decide by passing a resolution that a certain portion of its subscribed uncalled capital shall not be called up except in the event of winding up of the company which is called Reserve Capital.
Reserve Capital is different from Capital reserve.
Reserve capital which is portion of the uncalled capital to be called up in the event of winding up of the company is entirely different in nature from capital reserve which is created out of capital profits only.

According to Companies Act,2013 there is no restriction on companies to demand complete issue price of shares only on applcation or allotment or call of shares. Issue price can either be demanded in lumpsum or installments on application &/or allotment &/or call.

There is no limitation in the Comapnies Act,2013 on the amount maximum amount of premium on issue of shares. For example, a company in its growth stage enjoying a very good market reputation and making high profits can issue a share of Face Value of rs 10 at a premium of Rs. 990.

Authorised Share Capital, i.e maximum amount a company can raise in its lifetime is to be mentioned in the Capital Clause of the Memorandum of Association.

Share allotment A/c Dr      (Amount due)
        To share Capital Cash Dr                           (Amount Received)
Call in Arrears Dr           (Amount due)
        To share allotment 
Thus, there will be debit balance in share allotment account.

Issued Capital is that part of nominal capital that is offered to the public for subscriptionSubscribed Capital is that part of the issued share capital, which is subscribed by the public i.e., applied by the public and allotted by the company. It also includes the face value of shares issued by the company for consideration other than cash.

Balance in Share forefeiture for 50 shares      =Rs 1500 (50*30)
Balance in Share forefeiture for 20 shares      =Rs 600 [(20/50)1500]Adjusted towards share capital                         =Rs 200(2010)

Profit on re-issue w.r.t 20 shares                    =Rs 400 (600-200) 

Balance in Call Arrears A/c            = rs 2000
Amount received on re-issue         = Rs 8000 (8*1000)
Amount of Profit on re-Issue           = 8000-2000 = Rs 6000

As per Section 55 of Companies Act.2013,where preference shares are redeemed, otherwise than out of the proceeds of a fresh issue of shares (either equity or prefernce), there shall, out of profits which would otherwise have been available for dividends, be transferred to Capital Redemption Reserve Account, a sum
equal to the nominal amount of the shares redeemed.

Balance in Share Forefeture account                    =Rs5000 (already received)
Amount adjusted towards share capital
since shares are issued at Rs 70, Rs 80 paid up =Rs 1000
Amount of profit                                                           = rs (5000-1000)
                                                                                       =Rs 4000  

Debenture Interest is payable irrespective of the fact that the company makes profit or loss. It is like any other expense of the company which is to be paid before payment of preference as well as equity dividend.

As per Section 55 of the Companies Act, 2013 Preference Shares can be redeemed out of fresh issue of equity shares or out of profits. However, where any such shares are redeemed, otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividends, be transferred to Capital Redemption Reserve Account, a sum equal to the nominal amount of the shares redeemed.

Authorized Share Capital is the maximum amount of Share capital that a company can issue during its lifetime. Redemption of prefernce share doesnot cause any reduction in this maximum limit, i.e. Authorised Share Capital. Redemption of preference shares causes causes a redution in Subscribed and Issued Share Capital of a company.

The proceeds of fresh issue of debentures is not to be utilised for redemption of preference shares. An amount equal to face value of preference shares is to be transferred to the Capital Redemption Reserves if shares are redeemed out of divisible profits.Thus, in the given case, amount to be transferred to CRR would be Rs 1,00,000 since the proceeds of debentures cannot be utilised for the redemption of preference shares.

A debenture is a bond issued by a company under its seal, acknowledging a debt and containing provisions as regards repayment of the principal and interest. Debentures can be issued for cash, or for considerations other than cash or as a colleteral security.Dividends are paid out of profits to the owners (equity or preference shareholders) of the company and the issue od debentures is not to replace dividend paid by the company.

Debentures is a type of secured loan taken by the company and the debentures are issued at par, or at discount or on premium and the amount is to be paid back on maturity.Generally, a debentureholer will be paying the call money due to receive interest for the same. Debentures are not forefeited due to non payment of calls.

Debentures is a type of secured loan for a company and thus, appears under the head of 'Secured Loans' in Balance Sheet.