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CSEET · Fundamentals of Accounting · Introduction to Company Accounts

Shyam Ltd has Rs 100 shares on which Rs 60 is paid and Rs 40 is unpaid. It sub-divides each into two shares of Rs 50 each. What must be the position on each new share?

Each new Rs 50 share must have Rs 30 paid and Rs 20 unpaid. On sub-division, the proportion between paid and unpaid amounts must remain the same as on the original Rs 100 share, which was 60 to 40.

  1. ARs 30 paid and Rs 20 unpaidCorrect
  2. BRs 50 paid and nothing unpaid
  3. CRs 60 paid and Rs 40 unpaid
  4. DRs 25 paid and Rs 25 unpaid

Explanation

Section 61 requires the proportion between paid and unpaid amount on each reduced share to equal that on the original share. Original ratio is 60:40, so each Rs 50 share has Rs 30 paid and Rs 20 unpaid. Rs 25/25 breaks the ratio and sums wrongly with the original paid-up amount.

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