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Corporate Accounting
 ABOUT THE AUTHORs

Dr. P. Radhika is currently working as an Associate Professor at

the postgraduation department of Corporate Secretaryship, Anna
Adarsh College for Women, Chennai. She has more than 30 years of
teaching experience at the undergraduate level and 17 years of teaching
experience at postgraduate level. She has specialisation in the areas of
Financial, Corporate, Cost and Management Accounting and Corporate
Restructuring. She has published many research articles in international,
national and state level seminars, conferences and symposiums. She
has received the Best Paper Award for the paper presentation in the
National Seminar organised by DG Vaishnav College, in 2010. She is a member of the Board
of Examiners for various leading autonomous colleges and Universities across Tamil Nadu.
She holds Master’s degree in Commerce, M.Phil. degree from Annamalai University and
Master’s degree in Corporate Secretaryship from Alagappa University. She has been awarded
Ph.D. by the University of Madras. She is a recipient of ‘Acharya Ratna Award’ in recognition
of her exemplary teaching services for over 25 years by Punjab Association, in 2012 on the
joyous occasion of its Platinum Jubilee Celebrations, and also received ‘My Guru Award’
from Rotaract Club in the same year. She was the NSS Programme Officer, Anna Adarsh
College for Women, from 2006 to 2012. She has received a Certificate of Appreciation for her
contribution in the XXII Inter-University National Youth Festival ‘KALAI SARAL’ organised
by the University of Madras, in 2007. She is the faculty for CS Foundation Course. She is
an editorial board member for the in-house Annual Journal ‘FOCUS’ of the Department of
Corporate Secretaryship.
Dr. Anita Raman is currently working as an Associate Professor,
and Research Guide & Supervisor at the Postgraduate and Research
Department of Commerce, Anna Adarsh College for Women, Anna Nagar,
Chennai. She has 30 years of teaching experience at the undergraduate
level and 27 years at the postgraduation level. She has specialisation
in the areas of Human Resource Management, Corporate Accounting,
Entrepreneurial Development, Services Marketing and Direct Taxation.
She has presented papers in many national and international conferences
and has published articles in the Journals of Business and Management
Research, having high impact factor. She is the author of the Full Course Material of the
Distance Education of Tamil Nadu Open University for the subjects, Statistical Methods and
Operations Research and Treasury Management. She is a member of Board of Studies and
Board of Examiners, for various leading autonomous colleges and universities across Tamil
Nadu. She is also a member of the Editorial Board of an in-house Annual Journal Anvesh – The
Quest, in the Department of Commerce. She holds Master’s degree in Commerce from the
University of Madras and is a gold medalist from Madras Christian College. She obtained her
M.Phil. degree from the University of Madras, B.Ed. degree from Annamalai University, MBA
degree from Tamil Nadu Open University and Ph.D. from the University of Madras. She is a
Research Guide and Supervisor for M.Com., M.Phil. and Ph.D. courses. She has participated
in SIFE (Students in Free Enterprise) International Competition and has been awarded ‘Faculty
Recognition Award’ by Syntel Ltd. and KPMG. She has been awarded with ‘My Guru Award’
by Rotract Club of Presidency Candles and Ethiraj College for Women and ‘Acharya Ratna
Award’ by Punjab Association, in recognition of exemplary teaching services for over 25 years
in Anna Adarsh College for women.
 Corporate Accounting

P Radhika
Associate Professor
Department of Corporate Secretaryship
Anna Adarsh College for Women
Chennai

Anita Raman
Associate Professor, and Research Guide & Supervisor
Department of Commerce
Anna Adarsh College for Women
Chennai

McGraw Hill Education (India) Private Limited

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Corporate Accounting
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Dedicated to
Our Parents
 PREfACE

We deem it a great privilege to present the first edition of our book Corporate
Accounting to the academic community. Corporate Accounting is generally con-
sidered to be a complex subject in the commerce stream. So, the syllabus has
been divided into two volumes and this text is the first volume.
This book shall enable self-learning and facilitate the students to understand the
subject matter in a simple, systematic and lucid manner. It contains illustrations
and exercises ranging from easy to comprehensive problems. The exercises are
categorised as theory questions comprising of Short-Answer Questions and
Long-Answer Questions, Objective-Type Questions in the nature of Multiple-
Choice Questions, Fill in the Blanks, and True or False Questions and the
Standard Exercise Problems.
We are thankful to our Management, Punjab Association, Principal, colleagues
and students for their constant encouragement and support.
We are also grateful to the editorial staff of McGraw Hill Education (India),
especially Mr. Suman Sen, Ms. Laxmi Singh and Ms. Jagriti Kundu for bringing
out this book well in time.
Last but not the least, we acknowledge the motivation and support given to us by
our family members in the completion of this book.
Authors
 ROAdmAP TO THE syllABUs

CORPORATE ACCOUNTING
Madras University B.Com Semester-III

CORPORATE ACCOUNTING (Semester-III) Chapter

in the Book

Unit I: Share Capital

Issue of Shares—Types of Shares—Forfeiture of shares—
1, 2, 3
Re-issue of shares—Underwriting of shares—Stock split—
Meaning of Redemption—Redemption of Preference Shares.

Unit II: Debentures & Acquisition of Business

Meaning—Types of Debentures—Issue—Underwriting of
4, 5, 6
Debentures—Redemption of Debentures; Acquisition of
Business—Meaning—Profit Prior to Incorporation.

Unit III: Final Accounts

Final Accounts—Preparation of P & L A/c and Balance Sheet— 7
Managerial Remuneration—Calculation and Legal Provisions.

Unit IV: Valuation of Shares and Goodwill

Valuation of Shares and Goodwill—Meaning—Methods of 8
Valuation of Shares and Goodwill.

Unit V: Alteration of Share Capital

9
Meaning—Internal Reconstruction—Reduction of Share Capital.
 COnTEnTs

About the Authors ii

Preface vii
Roadmap to the Syllabus ix
1. Issue, Forfeiture, and Re-issue of Shares 1.1
1.1 Joint Stock Company 1.1
1.2 Company 1.1
Salient Features of a Company 1.1
Difference Between a Company and a Partnership Firm 1.2
1.3 Types of Companies 1.3
Types of Companies on the Basis of Incorporation 1.3
Types of Companies on the Basis of Liability 1.4
Types of Companies on the Basis of Public Investment 1.4
1.4 Company Formation 1.5
Promotion 1.5
Obtaining the Certificate of Incorporation 1.5
Obtaining the Certificate of Commencement of Business 1.6
Issue of Prospectus 1.6
1.5 Difference Between a Private Company and a
Public Company 1.7
1.6 Books Maintained by Companies 1.7
Proper Books of Accounts 1.7
Statistical Books 1.8
Statutory Books 1.8
1.7 Shares and Stocks 1.8
Differences Between Shares and Stocks 1.9
1.8 Types of Shares 1.9
Preference Shares 1.9
Equity Shares 1.11
1.9 Share Capital 1.11
1.10 Issue of Shares 1.12
Issue of Shares for Immediate Full Consideration 1.13
Issue of Shares for Consideration Receivable in Instalments,
Called as “Calls” 1.18
Issue of Shares Without Consideration: Issue of
Bonus Shares 1.56
Other Methods of Issue of Shares 1.61
xii Corporate Accounting

Comprehensive Problems 1.66

Theory Questions 1.78
Objective-Type Questions 1.79
Exercise Problems 1.81
Other Exercises 1.82
2. Underwriting of Shares and Debentures 2.1
2.1 Underwriting 2.1
Significance of Underwriting 2.2
2.2 Underwriting Commission 2.2
Payment of the Underwriting Commission 2.2
Underwriters, Sub-underwriters, Brokers and
Managers to Issues 2.3
2.3 Types of Underwriting 2.4
Pure Underwriting 2.4
Firm Underwriting 2.4
2.4 Status of Applications in Underwriting 2.5
Marked Applications 2.5
Unmarked Applications 2.5
Firm Underwriting Applications 2.5
2.5 Determining the Liability of Underwriters with
Respect to an Underwriting Contract 2.6
Complete Underwriting 2.6
Partial Underwriting 2.13
Firm Underwriting 2.19
2.6 Model Journal Entries 2.21
In the Books of Company 2.21
In the Books of Underwriter 2.21
Theory Questions 2.28
Objective-Type Questions 2.28
Exercise Problems 2.31
Other Exercises 2.32
3. Redemption of Preference Shares 3.1
3.1 Provisions of the Companies Act 3.1
3.2 Companies (Amendment) Act, 1988, and
Companies (Amendment) Act, 1996 3.2
Prohibition of Irredeemable Preference Shares 3.2
Redemption of Existing Irredeemable Preference Shares 3.2
Redemption of Existing Redeemable Preference Shares 3.2
Issue of Further Redeemable Preference Shares for
Redemption of Earlier Shares 3.2
3.3 Implications of Section 80 and Section 80A of
the Companies Act 3.2
3.4 Revenue and Capital Profit 3.4
3.5 Minimum Fresh Issue of Shares 3.4
3.6 Steps Involved in Problem Solving 3.5
 Contents xiii

3.7 Model Journal Entries for Redemption of Preference Shares 3.6

3.8 Specific Points to be Considered 3.7
Theory Questions 3.56
Objective-Type Questions 3.57
Exercise Problems 3.59
Other Exercises 3.61
4. Issue and Redemption of Debentures 4.1
4.1 Debenture 4.1
4.2 Classification of Debentures 4.1
4.3 Distinction Between ‘Debenture’ and ‘Share’ 4.2
4.4 Accounting for Debentures 4.3
Issue of Debentures 4.3
4.5 Redemption of Debentures 4.11
Methods of Redemption of Debentures 4.21
Theory Questions 4.75
Objective-Type Questions 4.76
Exercise Problems 4.78
Other Exercises 4.81
5. Acquisition of Business 5.1
5.1 Terms/Factors Associated with Acquisition of Business 5.1
5.2 Computation of Purchase Consideration 5.1
Net Asset Method 5.1
Net Payment Method 5.2
5.3 Accounting Treatment 5.2
When New Sets of Books are Opened 5.2
When Same Set of Books are Maintained 5.23
Theory Questions 5.31
Objective-Type Questions 5.31
Exercise Problems 5.33
6. Profits Prior to Incorporation 6.1
6.1 Treatment of Profit or Loss Prior to Incorporation 6.1
Profit Prior to Incorporation 6.1
Loss Prior to Incorporation 6.1
6.2 Relevance of Date of Certificate to Commence Business 6.2
6.3 Methods of Ascertaining Profit or Loss Prior to
Incorporation 6.2
Preparation of Trading and Profit and Loss Account for the
Period up to the Date of Incorporation 6.2
Preparation of Trading and Profit and Loss Account for
the whole Accounting Period and Apportionment of the
Resulting Profit or Loss Between Pre- and
Post-incorporation Periods 6.2
Preparation of Common Trading Account and the
Profit and Loss Account in ‘Columnar Form’ 6.3
6.4 Basis of Apportionment of Expenses 6.3
xiv Corporate Accounting

6.5 Steps Involved in Ascertaining Pre- and Post-Incorporation

Profits 6.4
6.6 Table Showing Treatment of Different Items 6.4
Theory Questions 6.41
Objective-Type Questions 6.42
Exercise Problems 6.44
Other Exercises 6.47
7. Final Accounts of Companies 7.1
7.1 Financial Statements 7.1
7.2 Legal Requirements, as per Companies (Amendment)
Act, 1988 7.1
7.3 Objectives of Financial Statements 7.2
7.4 Statement of Profit & Loss 7.2
Explanation for Contents of Statement of Profit & Loss 7.4
7.5 Format of Balance Sheet 7.5
Explanation for Contents of Balance Sheet 7.9
7.6 Corporate Dividend Tax 7.12
7.7 Transfer to Reserves 7.12
7.8 Managerial Remuneration 7.13
Calculation of Managerial Remuneration 7.14
Theory Questions 7.67
Objective-Type Questions 7.67
Exercise Problems 7.69
8. Valuation of Goodwill and Shares 8.1
8.1 Valuation of Goodwill 8.1
Goodwill 8.1
Treatment of Goodwill as an Asset 8.2
Factors Influencing Goodwill 8.2
Methods of Goodwill Valuation 8.2
8.2 Valuation of Shares 8.30
Importance of Valuation of Shares 8.30
Factors Influencing the Value of Shares 8.31
Methods of Valuation of Shares 8.31
Theory Questions 8.62
Objective-Type Questions 8.63
Exercise Problems 8.65
Other Exercises 8.69
9. Alteration of Share Capital and Internal Reconstruction 9.1
9.1 Alteration of Share Capital 9.1
Alteration of Share Capital, which does not Require Court
Approval 9.1
Kinds of Alteration of Share Capital and the Necessary
Accounting Entries 9.2
9.2 Internal Reconstruction or Capital Reduction 9.3
Reduction of Share Capital 9.3
 Contents xv

Procedure for Reducing Share Capital 9.3

Accounting Entries for Reduction of Capital 9.4
9.3 Some Points to be Noted 9.7
9.4 Alteration of Share Capital 9.8
9.5 Capital Reduction 9.11
Theory Questions 9.45
Objective-Type Questions 9.46
Exercise Problems 9.48
Other Exercises 9.50
Solved Question Paper I 2016 SQP.1
Solved Question Paper II 2016 SQP.20
Solved Question Paper I 2017 SQP.39
Solved Question Paper II 2017 SQP.55
 1
ISSUE, FORFEITURE, AND
RE-ISSUE OF SHARES

A company is an organisation developed to overcome the limitations and draw-

backs of the other forms of business organisations, namely sole proprietorship
business, partnership business, etc. It represents the third stage in the evolution
of business organisations. The earlier organisations could not fulfil the increased
need of modern industry and commerce. Thus, most of the large-scale industries
and business organisations have organised themselves as Joint Stock Companies.

1.1 JOINT STOCK COMPANY

A joint stock company is a voluntary association of persons formed for the pur-
pose of some business for profit with common capital, divisible into transferable
shares and possessing a corporate legal entity and a common seal.
A joint stock company is created by a process of law and can be put to an end
only by the process of law. It is an artificial person. It has a separate legal existence
and is distinct from the persons who have formed it and are its members. It is
capable of acting on its own name but since it does not have a physical existence,
it has to act through its agents and the contracts entered into by its agents must
be under the seal of the company.

1.2 COMPANY
Lord Justice Lindley defines a Company as “An association of many persons
who contribute money or money’s worth to a common stock, and employ it in
some common purpose (trade or Business), and who share the profit or loss (as
the case may be) arising therefrom”.
According to Section 3(1)(i) of the Companies Act, 1956, “Company” refers
to a company formed and registered under this Act or an existing company. An
existing company means a company formed and registered under any of the
former Companies Acts.

❍ Salient Features of a Company

1. It is a voluntary association of persons, i.e. no law can compel persons to
form a company.
1.2 Corporate Accounting

2. It is an artificial person, created by law. A company, being a separate body,

can sue and be sued in its name.
3. A company is a separate and distinct legal entity. It is independent of
members and its existence is not affected by the coming and going out of
the members. Further, it can hold, purchase and sell properties, can open
bank account in its name and can enter into contracts.
4. A company has a common seal. Since a company is an artificial person, it
can act only through the natural persons, called Directors and a common
seal evidences its distinct existence.
5. A company has a perpetual succession. Its continuity is not affected by the
changes in the membership.
6. Most of the companies are limited companies. In such cases, the liability of
the members is limited to the extent of the unpaid value of the shares held
by them.
7. It can be dissolved only by the law, which creates it.

❍ Difference between a Company and a Partnership Firm

Company Partnership Firm
1. A company is governed by the A partnership firm is governed by the
Companies Act, 1956. Partnership Act, 1932.
2. A company must be registered. Partnership firm is not legally obliged to
be registered.
3. A company has a separate legal A partnership has no separate legal
existence from its shareholders. existence distinct from its partners.
4. The minimum number of members The minimum number of persons required
required to form a private company to form a partnership is 2 and maximum
is 2 and a public company is 7. The number of partners in a banking firm can
maximum membership of a private be 10 and in a trading firm 20.
company is restricted to 50 while
there is no such limit for membership
of a public company.
5. The decrease or increase in The capital of the partnership firm can be
share capital can be done only in altered only by mutual agreement with
accordance to the provisions of the partners.
Indian Companies Act.
6. The death or insolvency of a A partnership firm ceases to exist if any
shareholder does not affect the partner retires, dies or declared insolvent.
existence of a company.
7. Shares in a public company is freely Partners cannot transfer their shares or
transferrable. interest in the firm without the consent of
the co-partners.
8. The liability of a shareholder is The partners are personally liable for all
limited to the extent of unpaid amount the actions of the partnership firm.
of shares held by him.
(Contd.)
 Issue, Forfeiture, and Re-issue of Shares 1.3

9. A company is managed by the elected A partnership firm is managed by every

Representatives, called the Board of partner.
Directors.
10. A shareholder is not an agent to make Each partner is an agent of the firm to
a contract. make a contract.
11. Audit of accounts is compulsory. Audit of accounts is not compulsory.
12. A company can be wound up only in A partnership firm can be dissolved at any
accordance with the provisions of the time by the partners.
Companies Act, 1956.

1.3 TYPES OF COMPANIES

Companies can be classified on the following basis:
1. On the basis of incorporation:
(i) Chartered companies
(ii) Statutory companies
(iii) Registered companies
2. On the basis of liability:
(i) Companies limited by shares
(ii) Companies limited by guarantee
(iii) Unlimited companies
3. On the basis of public investment :
(i) Private companies
(ii) Public companies
The features of various kinds of company are stated in the next section.

❍ Types of Companies on the Basis of Incorporation

Chartered Companies
Chartered companies are those, which are established by the special grant of
Royal Charter (i.e. by the king or queen) that lays down objectives, rights and
duties, etc., of the companies; for example, The East India Company. But, after
independence, such companies are not found in India.

Statutory Companies
Statutory companies are those, which are created and governed by special Acts
of the legislature. For example, The Reserve Bank of India, Life Insurance Cor-
poration of India, The Unit Trust of India, etc.; these companies are mainly con-
cerned with public utilities such as railways, gas, electricity, etc., and are the
enterprises of national importance and interest. These companies are also be-
stowed with special powers, unlike the registered companies, because they are
monopoly organisations and they supply services, which are vital to meet the
needs of the public.
1.4 Corporate Accounting

Registered Companies
Registered companies are those, which are formed and registered under the
Indian Companies Act of 1956. These registered companies are of three types,
which are divided on the basis of liability.

❍ Types of Companies on the Basis of Liability

Companies Limited by Shares
A company limited by shares refers to those companies in which the liability of
each member or shareholder is limited up to the nominal value or face value of
the shares held by them, i.e. the shareholders can be called upon to pay only up to
the face value of the shares. In other words, the members’ liability cannot exceed
the unpaid amount, on the shares held by them.

Companies Limited by Guarantee

Companies limited by guarantee refers to those companies in which the liability
of the members is limited by the Memorandum to a fixed amount, for which the
members undertake to contribute towards the assets of the company in the case
of its winding up. These companies may or may not have Share Capital. Exam-
ples for these types of companies are clubs, trade associations and the societies
constituted for promoting social objects.

Unlimited Companies
Unlimited companies are those companies in which there is no limit on the liabil-
ity of members, i.e. in the event of winding up of the company, the shareholders
or members are liable to the fullest extent of their fortunes to meet the obliga-
tions of the company.

❍ Types of Companies on the Basis of Public Investment

Private Company
The Companies Act defines a private company as a company, which by its ar-
ticles:
(i) restricts the right of transfer of its shares.
(ii) limits the number of its members to fifty.
(iii) prohibits any invitation to the public to subscribe for any share or debenture
of the company.

Public Company
The Companies Act defines a public company as “a company, which is not a
private company”. Hence, the public company does not have the restrictions as
is imposed upon a private company, as listed above.
 Issue, Forfeiture, and Re-issue of Shares 1.5

1.4 COMPANY FORMATION

The following steps are involved in the formation of a company:
1. Promotion
2. Obtaining the Certificate of Incorporation
3. Obtaining the Certificate of Commencement of Business
4. Issue of Prospectus

❍ Promotion
Promotion may be defined as the discovery of business opportunities and to in-
vestigate whether the idea is practicable and profitable. The person or the groups
of persons who conceive the business idea and take steps to organise and under-
take the investigation process are called as Promoters. If the promoters are of the
opinion that the discovered business idea will run successfully then, they prepare
the following documents:
■ The Memorandum of Association: This document is also called as the
charter of the company. It consists of name clause, place clause, objects
clause, liability clause, capital clause and the association or subscription
clause. This document is required to be signed by at least seven persons in
the case of a public company and by at least two persons in the case of a
private company.
■ The Articles of Association: This document contains the rules and
regulations of the company. The details relating to the internal management
of the company is stated in this document such as division of the share
capital, issue of shares, calls on shares, transfer of shares, forfeiture of
shares, re-issue of shares, directors’ qualification, appointment, removal,
rights, duties, remuneration, voting rights, meeting of directors and
shareholders, audit, etc.
■ A List of Directors: It contains the consent of the Directors along with an
undertaking given by them to take up and pay for the qualification shares.
■ A Statement of Nominal Capital: It shows the sanctioned authorised
capital of the company.
■ A Declaration Certificate: It shows the declaration stating that all the
requirements of the Companies Act and other formalities relating to
registration has been complied with.

❍ Obtaining the Certificate of Incorporation

On filing the above documents by the promoters and on fulfilling all the legal re-
quirements by the company with the Registrar of the companies, a Certificate of
Incorporation is issued by the Registrar denoting the formation of the company.
1.6 Corporate Accounting

This certificate is the legal evidence for having registered the company under the
Companies Act.

❍ Obtaining the Certificate of Commencement of Business

A Public company has to obtain the certificate of commencement of business af-
ter obtaining the certificate of incorporation to commence its business. Whereas
a Private company can commence its business soon after its incorporation.
To obtain a certificate of commencement of business the following conditions
are to be fulfilled and filed with the Registrar:
1. A copy of the Prospectus or a statement in lieu of prospectus
2. The minimum number of shares paid in cash, have to be subscribed and
allotted.
3. The Directors have to take up and pay for their qualification shares in cash.
4. There is no liability to repay the application money.
5. The share payable in cash is to be allotted with an equal amount not less
than the minimum subscription.
6. An advocate or any officer of the company should give a declaration that
all the conditions of the Act have been satisfied.
On thorough scrutiny of the above-mentioned conditions, the Registrar on
being fully satisfied, issues the Certificate of Commencement of Business and
only on receiving this certificate a public company can commence its business.

❍ Issue of Prospectus
A Prospectus issued by a company aims to invite the public to take up the shares
and debentures of the company so that the company collects the necessary funds.
It is the basis of contract between the company and the person who buys the
shares on the strength of the prospectus. A prospectus is not an offer but it is an
invitation to offer.
Section 2(36) of the Companies Act defines a prospectus as “Any document
described or issued as a prospectus and includes any prospectus, notice, circular,
advertisement or other document inviting deposits from the public or inviting
offers from the public for subscription or purchase of any share in or debenture
of, a body corporate.”
The following are the contents of a company prospectus:
■ A brief summary of the Memorandum of Association
■ Names and addresses of the Bankers, Auditors, Share-brokers and

Underwriters
■ Names and addresses of the Directors

■ The minimum subscription, i.e. the minimum amount of share capital for

which the company should receive applications

■ Preliminary expenses, and

■ The details of properties purchased.

 Issue, Forfeiture, and Re-issue of Shares 1.7

1.5 DIFFERENCE BETWEEN A PRIVATE COMPANY AND

A PUBLIC COMPANY

Private Company Public Company

1. The minimum number of members The minimum number of members
required to form a company is two. required to form a company is seven.
2. The maximum number of members There is no limit for maximum number
should not exceed fifty. of members.
3. It must have two directors. It must have three directors.
4. Shares are not freely transferable. Shares are freely transferable.
5. It can commence business by obtaining It can commence business only after
a Certificate of Incorporation. obtaining a Certificate of Commencement
of Business.
6. No public subscription for shares and Calls for public subscription by issuing
debentures. Prospectus.
7. Statutory meeting is not compulsory. Statutory meeting is compulsory to be
held.
8. Filing of statutory report with Filing of statutory report with Registrar
Registrar is not mandatory. is mandatory.
9. It must have the words Private It must have only the word Limited in its
Limited in its name. name.
10. It cannot issue share warrant. It can issue share warrant.
11. No restriction regarding remuneration There are legal restrictions on
of Directors. remuneration of Directors.
12. No restriction on allotment of shares. There are legal restrictions on allotment
of shares.
13. Directors can borrow from company. Directors cannot borrow from company.

1.6 BOOKS MAINTAINED BY COMPANIES

Every company is required to maintain the following books:
1. Proper Books of Accounts as per Section 209
2. Statistical Books
3. Statutory Books

❍ Proper Books of Accounts

The proper books of accounts to be maintained by every company are:
1. All sums received and expended by the company, i.e. receipts and
expenditures.
2. All sales and purchases of goods by the company.
1.8 Corporate Accounting

3. All assets and liabilities of the company.

4. Particulars relating to the utilisation of material or labour or other items of
costs, as may be prescribed by the central government, if the company is
engaged in production, processing, manufacturing or in mining activities.

❍ Statistical Books
1. Application and Allotment Book for Shares and Debentures
2. Call Book
3. Register of Share Warrant and Share Certificates
4. Register of Transfers of Shares and Debentures
5. Register of Sealed Documents
6. Register of Power of Attorney
7. Register of Probates
8. Register of Directors’ Attendance
9. Dividend or Interest Book
10. Register of Transfer Certificates of Shares and Debentures.

❍ Statutory Books
1. Register of Investment (Section 49)
2. Register of Charges (Section 143)
3. Register of Members (Section 150)
4. Register of Debentureholders [Section 152 (1)]
5. Minute Books (Section 193)
6. Books of Accounts and Annual Reports (Section 209 and 211)
7. Register of Contracts (Section 301)
8. Register of Directors, Manager, Secretary, etc. (Section 303)
9. Register of Directors’ Shareholdings (Section 307)
10. Register of Loans made, guarantees given or securities provided to
companies (Section 370)
11. Register of Investments in Shares and Debentures (Section 372).

1.7 SHARES AND STOCKS

Capital is the major element for any trading concern. A company raises capital
by inviting the public to buy its shares through a document called as Prospectus.
The prospectus must reveal the actual state of affairs of the company. The capital
of a company is usually divided into different units of fixed amount. These units
are called as Shares.
 Issue, Forfeiture, and Re-issue of Shares 1.9

Under Section 2(46) of the Companies Act of 1956, a share is defined as

“Share means a share in the capital of a company, and includes stock except
where a distinction between stock and share is expressed or implied”.
Further, a share indicates an interest of the shareholder in the company,
measured by a sum of money, in order to know the liability of the shareholder
in the first place and of interest in the second place. A share is not a sum of
money but is an interest measured by a sum of money and made up of various
rights contained in the contract. Thus, a share also represents the interest of the
shareholders and also their rights and liabilities.
The capital raised by the company by the issue of shares is called as “Share
Capital”. The capital of the company, which is divided into different units with a
definite value are called as “Shares”.
A stock also refers to the shares of a company but in a different form. Stock
is the sum of fully paid-up shares consolidated and divided into different parts in
order to make it convenient to hold shares.

❍ Differences between Shares and Stocks

Share Stock
1. A share is one of a number of Stock is the capital in the form of a fund,
individual units into which a capital which may be divided into any desired
of a company is divided. amount.
2. Shares may be partly or fully paid-up. Stock must be fully paid-up.
3. Shares can be directly issued. Stock cannot be directly issued.
4. Shares have a nominal value. Stock does not have a nominal value.
5. Shares must have specific number. Stocks are never numbered.
6. Shares are of equal denominations. Stocks may be split into unequal amounts.
7. Shares cannot be transferred in Stocks can be transferred in fractional
fractional amounts. amounts, as provided by the Articles.

1.8 TYPES OF SHARES

The shares, which can be issued by the company, are of two types—Preference
Shares and Equity Shares.

❍ Preference Shares
According to Section 85(1) of the Companies Act, Preference Shares are those
shares, which have some preferential rights over the other types of shares, i.e.
for a share to be called as a preference share, it must have the following two
preferential rights:
1. The right to be paid dividend during the life-time of the company
2. The right to the return of capital when the company goes into liquidation.
1.10 Corporate Accounting

The following are the types of preference shares:

1. Cumulative Preference Shares
2. Non-cumulative Preference Shares
3. Participating Preference Shares
4. Non-participating Preference Shares
5. Convertible Preference Shares
6. Non-convertible Preference Shares
7. Redeemable Preference Shares
8. Irredeemable Preference Shares
9. Guaranteed Preference Shares

Cumulative Preference Shares

The dividend payable on these kinds of preference shares keeps getting accumu-
lated till it is fully paid off by the company. That is, if a company is not able to
pay dividend in any year due to inadequate profit, then the fixed dividend rate on
preference share gets accumulated and the dividend becomes payable as arrears
of dividend to the cumulative preference shareholders out of the profit earned
in the subsequent year. A company has to pay the arrear of dividend first, to the
cumulative preference shareholders, before anything is paid out of profits to the
holders of any other class of shares. These types of shareholders have a right to
get a fixed percentage as dividend every year. Generally, a preference share is
treated as a cumulative preference share, unless stated otherwise.

Non-cumulative Preference Shares

A company shall give preference in the matter of payment of dividend at a fixed
rate in any year only if there is any profit available for distribution in that year. If
there are no profits in a particular year, the right to claim dividend will lapse by
the non-cumulative preference shareholder. Also, the shareholders cannot claim
arrears of dividends of any year out of the profits of the subsequent year. Hence,
if the dividend is not paid, it does not get accumulated and it cannot be carried
forward.

Participating Preference Shares

These kinds of shares are entitled both for a fixed percentage of dividends and
also to a share in the surplus profits, which remain after the claims of the equity
shareholders. But, this type of shares should be expressly mentioned or provided
in the Articles of Association of the company.

Non-participating Preference Shares

These kinds of shares are entitled only for fixed percentage of dividend and
not to a share in the surplus profits. However, if the Memorandum and Articles
of Association remain silent, then all preference shares are deemed to be non-
participating preference shares.
 Issue, Forfeiture, and Re-issue of Shares 1.11

Convertible Preference Shares

Within a certain period of time, the holders of these shares have a right to get
their preference shares converted into equity shares.

Non-convertible Preference Shares

These shares cannot be converted into equity shares.

Redeemable Preference Shares

Generally, shares are not redeemable (refundable), i.e. the amounts paid on
shares are not refundable, except when the company is liquidated. But, if the Ar-
ticles of Association states the authority held by the company, then the company
can issue shares for a fixed term and they are paid off on the expiry of the term.
Such shares are called Redeemable Preference shares.

Irredeemable Preference Shares

The shares, which cannot be redeemed during the lifetime of the company, are
called as Irredeemable Preference Shares.

Guaranteed Preference Shares

To the holders of such shares, dividend at fixed rates are guaranteed, irrespective
of the fact whether the company has earned any profit or not. Such guarantee
is not given by the company itself but by some third-party, like a bank, an indi-
vidual or an institution.

❍ Equity Shares
Equity Shares are also called as Ordinary Shares. According to Section 85(2), the
equity shares, with reference to any company limited by shares, are those that are
not preference shares. The following are the features of these shares:
■ Equity shares do not enjoy any preferential rights.
■ There is no fixed rate of dividend on equity shares.
■ The rate of dividend is dependent on the profits earned by the company,
year to year.
■ Equity shares are given returns, i.e. dividend when the company earns
more profits, i.e. if profits are insufficient, equity shareholders may not get
dividend at all.
■ The rate of dividend is determined by the directors of the company.

1.9 SHARE CAPITAL

The share capital denotes, in monetary terms, the amount raised by the issue of
shares by a company. The share capital of a company is, however, divided into
the following categories:
1.12 Corporate Accounting

1. Authorised Share Capital: It is the maximum amount, which the company

is authorised to raise by issuing the shares, given by the Registrar of the
Companies. It is also called as Nominal Capital or Registered Capital.
It is also the capital, which is stated in the Company’s Memorandum of
Association with which the company intends to be registered. This capital
can be increased or decreased by passing an ordinary resolution.
2. Issued Share Capital: It refers to that part of the authorised capital, which
is offered to the public for subscription. The company can issue whole
or part of the authorised share capital. Thus, the shares, which are issued
for public subscription, are called Issued Share Capital. The balance of
shares, if any, which are not issued, are called as Unissued Share Capital.
However, the issued share capital cannot be more than the authorised share
capital.
3. Subscribed Share Capital: It refers to that part of the issued share capital,
which is purchased or taken up by the public, i.e. it is the share capital for
which share application money is received and shares are allotted to the
public. If the issued shared capital is partly taken up by the public, then the
balance of shares are called as Unsubscribed Share Capital.
4. Called-up Share Capital: It refers to that part of the subscribed capital for
which the company makes a call to collect the remaining portion of the
share money called as call money. According to the needs of the company,
the amount may be called up. Hence, the difference between the subscribed
capital and the called-up share capital are called as Uncalled Share Capital.
5. Paid-up Share Capital: It refers to the amount received against the calls
made on the shares. The unpaid balance of the called-up capital is known
as Uncalled Capital or Calls-in-Arrears.

1.10 ISSUE OF SHARES

Issue of Share by a company can be classified based on the manner of receiving
consideration as follows:
1. Issue of shares for immediate full consideration.
2. Issue of shares for consideration receivable in instalments, which are called
as “Calls”.
3. Issue of shares without any consideration, i.e. issue of bonus shares.
4. Issue of shares through other methods such as:
■ Rights Issue

■ Employee Stock-Option Schemes

■ Sweat Equity

■ Private Placement, etc.

 Issue, Forfeiture, and Re-issue of Shares 1.13

❍ Issue of Shares for Immediate Full Consideration

Under this type of issue of shares, the considerations are received immediately
in full. So, the transaction gets completed in one stroke and there is no need for
further follow-up action in future. However, the consideration receivable can be
in the following two forms—Non-Cash Consideration and Cash Consideration

Non-cash Consideration
Non-cash consideration means that a company may issue shares for consideration
other than cash, i.e. in the form of acquiring the fixed assets or may purchase the
business from a sole trader or partnership firm or even some other company. The
following journal entries are to be passed to record such transactions as follows:
1. Issue of shares for acquisition of fixed assets:
Journal Entry
Particulars Debit (`) Credit (`)
Fixed Asset A/c Dr. xxx
To Share Capital A/c xxx
(Being allotment of shares made in consideration of
the purchase of fixed assets)
2. Issue of shares for a purchase or acquisition of business:

Journal Entries
Particulars Debit (`) Credit (`)
Assets A/c Dr. xxx
Goodwill A/c Dr. xxx
To Liabilities A/c xxx
To Vendors A/c xxx
To Capital Reserve A/c xxx
(Being assets and liabilities of the business taken
over and the difference in purchase price is debited
to goodwill A/c if the purchase price is higher and is
credited to capital reserve A/c if the purchase price
is less)
Vendors A/c Dr. xxx
To Share Capital A/c xxx
(Being the issue of shares made to vendors for the net
amount payable)
3. Issue of shares to promoters, etc., for services rendered by them: The
idea of promoting a business as a company is developed by promoters. In
order to recognise their services and other business associates, the company
may issue shares for which there is no tangible consideration. Therefore,
goodwill account is debited.
1.14 Corporate Accounting

Journal Entry
Date Particulars Debit (`) Credit (`)
Goodwill A/c Dr. xxx
To Share Capital A/c xxx
(Being shares issued to promoters for their
services)

Illustration 1
A Ltd. issued shares for non-cash consideration in the following cases. Pass the
necessary journal entries to record the transactions:
1. Issued 20,000 shares of ` 10 each in consideration for plant and machinery
purchased on 10th January 2017.
2. Issued 30,000 shares of `10 each to B Ltd. for taking over the business by
acquiring the following assets and liabilities at the following values on 15th
January 2017:
Plant and Machinery—`1,00,000; Land and Buildings—`1,50,000;
Furniture—`50,000; Sundry Creditors—`50,000.
3. Issued 10,000 shares of `10 each to the promoters in consideration for their
services on 30th January 2017.
Solution:

Journal Entries
Date Particulars L.F. Debit (`) Credit
(`)
10.01.2017 Plant & Machinery A/c Dr. 2,00,000
To Share Capital A/c 2,00,000
(Being shares issued for plant and
machinery purchased )
15.01.2017 Plant & Machinery A/c Dr. 1,00,000
Land & Buildings A/c Dr. 1,50,000
Furniture A/c Dr. 50,000
Goodwill A/c Dr. 50,000
(Bal. Fig)
To Sundry Creditors A/c 50,000
To B Ltd. A/c 3,00,000
(Being assets and liabilities taken over
from B Ltd. for Rs 3,00,000)
B Ltd. A/c Dr. 3,00,000
To Share Capital A/c 3,00,000
(Being shares issued to B Ltd. for the
assets purchased)
(Contd.)
 Issue, Forfeiture, and Re-issue of Shares 1.15

03.01.2017 Goodwill A/c Dr. 1,00,000 1,00,000

To Share Capital A/c
(Being issue of 10,000 shares `10 each
made to the promoters for their services)

Cash Consideration
The most common practice adopted by the companies relate to the issue of shares
for cash consideration. The issue may be at par or at a premium or at a discount.
The following are the journal entries to be passed to record such transactions:
Journal Entries
Particulars Debit (`) Credit (`)
When shares are issued at par:
Bank A/c Dr. xxx
To Share Capital A/c xxx
(Being issue of shares for cash, at par)
When shares are issued at premium:
Bank A/c Dr. xxx
To Share Capital A/c xxx
To Securities Premium A/c xxx
(Being issue of shares for cash, at premium)
When shares are issued at discount:
Bank A/c Dr. xxx
Discount on Issue of Shares A/c Dr. xxx
To Share Capital A/c xxx
(Being issue of shares for cash, at discount)

Illustration 2
Sumathi Ltd. issued 2,00,000 equity shares of `10 each to the public. The issue
was fully subscribed by the public and the amount has been paid in one single
instalment. Pass the required journal entries in the book of the company, if:
(a) the shares were issued at par
(b) the shares were issued at a premium of 10%
(c) the shares were issued at a discount of 10%
1.16 Corporate Accounting

Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Shares issued at par
Bank A/c Dr. 20,00,000
To Equity Share Capital A/c 20,00,000
(Being issue of 2,00,000 shares of `10
each issued at par)
Shares issued at premium
Bank A/c Dr. 22,00,000
To Equity Share Capital A/c 20,00,000
To Securities Premium A/c 2,00,000
(Being issue of 2,00,000 shares of `10
each issued at a premium of 10 %)
Shares issued at discount
Bank A/c Dr. 18,00,000
Discount on Issue of Shares A/c Dr. 2,00,000
To Equity Share Capital A/c 20,00,000
(Being issue of 2,00,000 equity shares of
`10 each at a discount of 10 %)

Illustration 3
Rajan Ltd. purchased the business of Raghu Bros. for `45,00,000, payable in
fully paid shares of `100 each. What entries will be made in the books of Rajan
Ltd., if such an issue is made:
(a) at par
(b) at a premium of 10%
(c) at a discount of 10%
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Shares issued at par
Business Purchase A/c Dr. 45,00,000
To Raghu Bros. A/c 45,00,000
(Being acquisition of business from
Raghu bros. for `45,00,000)
Raghu Bros. A/c Dr. 45,00,000
To Equity Share Capital A/c 45,00,000
(Being shares allotted for `45,00,000 in
acquiring the business)
(Contd.)
 Issue, Forfeiture, and Re-issue of Shares 1.17

Shares issued at 10% premium

Raghu Bros. A/c Dr. 45,00,000
To Equity Share Capital A/c 40,90,910
To Securities Premium A/c 4,09,090
(Being shares allotted at a premium of
10% for acquisition of business)
Shares issued at 10% discount
Raghu Bros. A/c Dr. 45,00,000
Discount on Issue of Shares A/c Dr. 5,00,000
To Equity Share Capital A/c 50,00,000
(Being shares allotted at a discount of
10% for acquisition of business)
Issue of Shares at par, premium and at discount for Non-Cash Consideration
(in the nature of acquisition or purchase of a fixed asset):

Illustration 4
Satish Ltd. purchased land and buildings costing `5,00,000 and as payment to-
wards purchase price, allotted equity shares of `10 each as fully paid. Pass jour-
nal entries in the books of Satish Ltd., if the company had issued shares at par, at
a premium of 10% and at a discount of 10%.
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Shares issued at par
Land and Buildings A/c Dr. 5,00,000
To Equity Share Capital 5,00,000
(Being issue of 50,000 shares @ `10 each
for purchase of land and buildings)
Shares issued at a premium
Land and Buildings A/c Dr. 5,00,000
To Equity Share Capital A/c 4,54,545
To Securities Premium A/c 45,455
(Being issue of 50,000 shares of `10 each
at a premium of 10% for purchase of land
and buildings)
Shares issued at a discount
Land and Buildings A/c Dr. 5,00,000
Discount on Issue on Shares A/c Dr. 50,000
To Equity Share Capital A/c 5,50,000
(Being issue of 50,000 shares of `10 each
at a discount of 10% for purchase of land
and buildings)
1.18 Corporate Accounting

❍ Issue of Shares for Consideration Receivable in

Instalments, called as “Calls”
All public limited companies mostly issue shares for consideration receivable
in instalments. This method is considered to be more flexible and convenient by
the prospective investors because they need not pay the full value of the shares
immediately. Sometimes, the company may not require the entire amount in the
short run from the investors. Hence, it enables the company to make calls as and
when it is required. And, they receive the share capital in instalments over a pe-
riod of time. The instalments are: Application Money, Allotment Money and Call
Money. Payment of money in instalments is also convenient to the shareholders.
The following are the stages involved in the issue of shares to the public:
1. Issue of prospectus: When a company decides to raise capital through
issue of shares, an official invitation, called as Prospectus, has to be given
to the public, for subscription. The Prospectus contains details about the
company, such as names of the Directors, Auditors, Annual Report, etc. It
also states the amount payable as application money and allotment money
on the shares.
Section 69(3) of the Companies Act requires payment of at least 5 per
cent of the nominal value of share as application money. Further, SEBI
regulations stipulate that the application money in the case of a public issue
should be at least 25 per cent of the issue price of the shares.
2. Receiving of share application: In this stage, the interested investors
express their willingness to purchase the shares. The investor, thus, fills in
the application form and sends the application along with the application
money to the company. The company may receive the share applications in
any one of the following ways:
■ Full Subscription: If the total number of share application forms
received is equal to the total number of shares issued by the company,
then it is called as full subscription.
■ Under-Subscription: If the total number of share application forms
received are less than the total number of shares issued by the company,
then it is called as under-subscription.
■ Over-Subscription: If the total number of share application forms
received are more than the total number of shares offered by the
company, then it is called as over-subscription.
The share application money received by the company is recorded in the
books of accounts as follows:
Journal Entry
Particulars Debit (`) Credit (`)
Bank A/c Dr. xxx
To Share Application A/c xxx
(Being application money received)
 Issue, Forfeiture, and Re-issue of Shares 1.19

3. Allotment of shares: The company scrutinises all the application forms

received and then decides the application forms that are to be accepted.
This is called allotment of shares.
The Board of Directors make the allotment of shares, provided the
following conditions are satisfied:
1. The company receives the minimum subscription.
2. The prospectus or statement in lieu of prospectus is filed with the
Registrar of Companies.
3. At least 5 per cent of the nominal value of shares is received as
application money (25 per cent in the case of public issue of shares).
A Letter of Allotment is then issued to the successful applicants,
mentioning the number of shares allotted and the amount payable as
allotment money. However, in the case of over-subscription, the company
follows certain norms stipulated by SEBI. The company consults the stock
exchange to finalise the allotment process.
The company may adopt any of the following methods for allotment of
shares:
■ Full allotment: The board of directors may make full allotment to
the required number of applicants and reject the other applications.
The company either adopts the lottery method or evolves a criteria in
consultation with the stock exchange if the shares are listed.
The application money on shares allotted is transferred to Share
Capital Account and, the application money on applications rejected
is refunded. These transactions are recorded in the Books of Accounts,
as follows:
Journal Entries
Date Particulars Debit (`) Credit (`)
For transfer of application money on shares
allotted
Share Application A/c Dr. xxx
To Share Capital A/c xxx
(Being transfer of application money on
allotted shares)
For refund of rejected application money
Share Application A/c Dr. xxx
To Bank A/c xxx
(Being refund of application money to rejected
applicants)

■ Partial allotment: In this case, the applicants are divided into groups
based on the number of shares applied for. After that, the company
1.20 Corporate Accounting

allots shares to different groups in different ratios. For example, those

who have applied for 300 shares may be allotted 75 shares (25 per
cent) and those who have applied for 400 shares may be allotted 120
shares (30 per cent).
The application money on shares allotted is transferred to Share
Capital Account. There may be surplus application money because
of partial allotment. The surplus application money may be adjusted
towards sums due on allotment or even calls if so, authorised by the
Articles of an Association.
■ Pro-rata allotment: When there is over-subscription, a company
may allot shares to the applicants on a pro-rata basis. The shares are
allotted in proportion to the number of shares applied. For example,
A Ltd. made an issue of 3,00,000 shares to the public but it received
applications for 4,00,000 shares. The company allotted the shares on a
pro-rata basis, as there was over-subscription.
For 4,00,000 shares applied, number of shares allotted is 3,00,000,
i.e. for every four shares applied, allotment is three shares. If a person
applies for 400 shares, he will be allotted 300 shares.
The application money on shares allotted is transferred to Share
Capital Account in this case also. Further, the surplus application
money shall be adjusted towards sums due on allotment or even calls
if so authorised by the Articles of Association.
Allotment letters are sent to the allottees, who have been allotted
shares by the company and the amount payable is also stated in the
letter within the stipulated date. The allottees become shareholders of
the company. Letters of Regret are sent to those who have not been
allotted shares. The application money paid by them is refunded.
These transactions are recorded, as follows, in the Books of Accounts
for partial and pro-rata allotment:
Journal Entries
Date Particulars Debit (`) Credit (`)
For transfer of excess application
money on partial and pro-rata
allotment xxx
Share Application A/c Dr. xxx
To Share Allotment A/c xxx
To Calls-in-Advance A/c
(Being transfer of excess application
money to share allotment and calls-in-
advance A/c if articles permit for calls)
Note: Any excess application money
beyond the issue value of shares cannot
be transferred to Calls-in-Advance and
should be refunded to the applicants.
(Contd.)
 Issue, Forfeiture, and Re-issue of Shares 1.21

For allotment money due

Share Allotment A/c Dr. xxx
To Share Capital A/c xxx
(Being allotment money due)
For allotment money received
Bank A/c Dr. xxx
To Share Allotment A/c xxx
(Being allotment money received)

Illustration 5
R.K. Ltd. invited applications for 40,000 shares of `10 each, payable as on
application `5; on allotment `5. The issue was fully subscribed. The amount was
received in full. Give journal entries in the books of the company.
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Bank A/c Dr. 2,00,000
To Equity Share Application A/c 2,00,000
(Being share application money received
on 40,000 equity share @ `5 each)
Equity Share Application A/c Dr. 2,00,000
To Equity Share Capital A/c 2,00,000
(Being share application money
transferred to share capital A/c)
Equity Share Allotment A/c Dr. 2,00,000
To Equity Share Capital A/c 2,00,000
(Being share allotment money due)
Bank A/c Dr. 2,00,000
To Equity Share Allotment A/c 2,00,000
(Being share allotment money received)

4. Making of calls: The issue value of shares is received in the form of

application money and then, allotment money and the balance amount
is collected by making of one or more calls. While making calls, the
company sends a call notice to the shareholders, indicating the balance
amount payable by the shareholders as “call money”. If the call money
is received in full, the process of issue of shares gets completed. In such
cases, the following journal entries are passed in the Books of Accounts of
the company:
1.22 Corporate Accounting

Journal Entries
Date Particulars Debit (`) Credit (`)
For first call money due
Share First Call A/c Dr. xxx
To Share Capital A/c xxx
(Being first call money due)
For receiving first call money
Bank A/c Dr. xxx
To Share First Call A/c xxx
(Being share first call money received)
Note: The above two journal entries need
to be passed for all the calls made by the
company, i.e. like second call, third call,
etc.

Illustration 6
Under subscription
Vikram Ltd. issued 10,000 shares of `10 each to the public. The public has ap-
plied for 9,000 shares. The shares are payable as follows:
On application `4
On allotment `4
On call `2
Give journal entries in the book of the company.
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Bank A/c Dr. 36,000
To Share Application A/c 36,000
(Being share application money
received on 9,000 shares)
Share Application A/c Dr. 36,000
To Share Capital A/c 36,000
(Being the transfer of share
application money)
Share Allotment A/c Dr. 36,000
To Share Capital A/c 36,000
(Being share allotment amount due)
Bank A/c Dr. 36,000
To Share Allotment A/c 36,000
(Being share allotment money
received)
(Contd.)
 Issue, Forfeiture, and Re-issue of Shares 1.23

Share Final Call A/c Dr. 18,000

To Share Capital A/c 18,000
(Being share final call amount due)
Bank A/c Dr. 18,000
To Share Final Call A/c 18,000
(Being the receipt of share final call
money)

Illustration 7
Over subscription and refund of application money
R.R. Ltd. issued 10,000 shares of `10 each, payable as under:
On application `3 per share
On allotment `4 per share
On first and final call `3 per share
30,000 shares were applied for. The directors accepted applications for 10,000
shares. All moneys due were fully received. Give journal entries and prepare the
Balance Sheet of the company.
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Bank A/c Dr. 90,000
To Share Application A/c 90,000
(Being share application money
received on 30,000 shares)
Share Application A/c Dr. 90,000
To Share Capital A/c 30,000
To Bank A/c 60,000
(Being the transfer of share application
money to share capital and excess
application money refunded)
Share Allotment A/c Dr. 40,000
To Share Capital A/c 40,000
(Being the amount due on share
allotment A/c)
Bank A/c Dr. 40,000
To Share Allotment A/c 40,000
(Being the amount received on share
allotment A/c)
Share First and Final Call A/c Dr. 30,000
To Share Capital A/c 30,000
(Being the final call due)
(Contd.)
1.24 Corporate Accounting

Bank A/c Dr. 30,000

To Share First and Final Call A/c 30,000
(Being the final call amount received)

Balance Sheet of R.R. Ltd., as on …

Note No. (`)
I. Equity and Liabilities:
(i) Shareholder’s Funds
Share Capital 1 1,00,000
Reserves and Surplus —
(ii) Non-current Liabilities —
(iii) Current Liabilities —
Total: (i) + (ii) + (iii) 1,00,000
II. Assets:
(i) Non-current Assets —
(ii) Current Assets
Cash at Bank 1,00,000
Total: (i) + (ii) 1,00,000

Note No. (`)

1. Share Capital
Issued and Subscribed Capital
10,000 shares of `10 each fully paid 1,00,000

Illustration 8
Over subscription and pro-rata allotment
Lakshmi Ltd. invited applications for 20,000 shares of `10 each, payable as fol-
lows: on application `4; on allotment `4; on final call `2. Applications were
received for 25,000 shares. The directors made pro-rata allotment. Excess ap-
plication money was adjusted towards allotment and call was received. Make the
necessary journal entries in the book of Lakshmi Ltd.
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Bank A/c Dr. 1,00,000
To Share Application A/c 1,00,000
(Being share application money received
on 25,000 shares)
(Contd.)
 Issue, Forfeiture, and Re-issue of Shares 1.25

Share Application A/c Dr. 1,00,000

To Share Capital A/c 80,000
To Share Allotment A/c 20,000
(Being transfer of share application
money to share capital A/c and excess
money adjusted towards allotment)
Share Allotment A/c Dr. 80,000
To Share Capital A/c 80,000
(Being shares allotment amount due)
Bank A/c Dr. 60,000
To Share Allotment A/c 60,000
(Being the receipt of share allotment
money)
Share Final Call A/c Dr. 40,000
To Share Capital A/c 40,000
(Being amount due on final call)
Bank A/c Dr. 40,000
To Share Final Call A/c 40,000
(Being the receipt of share final call
money)

Illustration 9
AA Ltd. invited applications for 20,000 shares of the value of `100 each. The
amount payable is `30 on application, `30 on allotment, `20 on first call and `20
on final call. The whole of the above issue was applied for and cash was duly
received. Give journal entries in the book of the company.
Solution:
Journal Entries
Date Particulars L.F. Debit (`) Credit (`)
Bank A/c Dr. 6,00,000
To Share Application A/c 6,00,000
(Being the receipt of the share
application money on 20,000 shares)
Share Application A/c Dr. 6,00,000
To Share Capital A/c 6,00,000
(Being the transfer of share application
money to share capital A/c)
Share Allotment A/c Dr. 6,00,000
To Share Capital A/c 6,00,000
(Being allotment money due)
Bank A/c Dr. 6,00,000
To Share Allotment A/c 6,00,000
(Being allotment money received)
(Contd.)
Exploring the Variety of Random
Documents with Different Content
 Puhemies Näppisen kysyttyä, oliko vielä muita asioita, huusi Kaisa
Kompura kahvilan puolelta, että entäs se vallankumouksen
toimeenpaneminen, jokos siitä on päätetty?

Puhemies Näppinen esitteli käsiteltäväksi kysymyksen

vallankumouksen valmistamisesta ensi syksyksi.

Poliisi Pekka Suova ilmoitti, että nimismies on antanut käskyn

hajoittaa kokouksen, jos siinä ruvetaan puhumaan
vallankumouksesta.

Kokouksen jäsenten ilmaistessa huudoilla inhomieltä kysyi

puhemies
Näppinen, että aiotkos sitten hajoittaa?

Pekka Suova vastasi, että niinkuin käsky on.

Puhemies Näppisen kysyttyä, mitä Pekka Suova aikoi tehdä, jos ei

internaali tottele hajoittamiskäskyä, vastasi Suova, että sittenpähän
sen näette.

Puhemies Näppinen sanoi, ettei poliisi voi mitään näin isolle

kansanjoukolle, mihin Pekka Suova vastasi, että älä turise Näppinen
joutavia selvässä asiassa.

Tov. Jerobeam Näppisen tiedusteltua, luuliko nimismies olevansa

niin iso herra, että voi uhmata vallankumouksellisen kansan
joukkotahtoa Pöllölässä, vastasi Pekka Suova ivamielisesti, että
näkyypä tuossa olevan teille herraa tarpeeksi.

Keittiön puolella aloitti Kaisa Kompura kimakalla äänellä

nimismiestä vastaan tähdätyn virren, johon useat tuvassa olevat
kommunistisolut virkavallan kiusaksi yhtyivät:
 »Juur turhaan kiukuissaan
Nyt maailman päämies vaan
Pauhaapi…»

Huomattiin että myöskin poliisi Suova veteli virttä, minkä johdosta

nähtiin eräiden puolinoskien kummallisesti hymyilevän.

Virren päätyttyä kysyi poliisi Suova, eikö Näppinen vielä pitäisi

pientä rukousta, mikä noskemaisuutta kuvaava lauselma
puhemiehen puolelta jätettiin omaan alhaiseen arvoonsa.

Puhemies Näppinen teki julkisen ilmoituksen, että hän alistuu

porvarillisen väkivallan edessä, lausuen surkuttelunsa, että poliisi,
köyhän leskivaimon poikana, sortaa sitä luokkaa, josta on itsekin
lähtöisin.

Pekka Suova sanoi, että jos tässä sortaminen olisi kyseessä, niin
olisi hän ensin mennyt tuonne kahvilan puolelle pyytämään
maistellakseen sitä Reeta Sinkkosen limonaatia, jolla on niin muikea
haju, että tuntuu pihalle asti.

Puhemies Näppinen selitti, ettei hän suinkaan ole tahtonut millään

tavoin loukata Pekka Suovaa, joka tunnetaan maltilliseksi
virkamieheksi.

Israel Huttunen ehdotti, että kokous lausuisi Pekka Suovalle

kansan luottamuksen, mikä yksimielisesti hyväksyttiin.

Poliisi Pekka Suova lausui kansalle: kiitoksia!

8 §.
 Kokouksen jatkuessa sääntöperäisessä järjestyksessä ilmoitti
puhemies Näppinen kysymystä olleen kommuunin keskuudessa
yksityisesti, olisiko kommunistien ryhdyttävä keskustelemaan
noskelaisten kanssa yhteistoiminnan aikaansaamisesta
eduskuntavaaleissa köyhälistön rintaman lujittamiseksi porvarillista
taantumusta vastaan.

Tov. Kusti Pirhonen selvitteli yhteiskunnallisia katsantokantoja

luokkataistelun valossa, tullen siihen johtoperään, että noskelaisille
olisi tarjottava tilaisuus yhteistoimintaan luokkatietoisen köyhälistön
kanssa.

Tämä puhe synnytti kiivasta mielenliikutusta laajoissa

vallankumouksellisissa riveissä, jotka huusivat, että Pirhosen Kusti
on tainnut saada urakakseen täyttää ohrananoskelaisten
syöttiläspomojen mahalaukut työtätekevän luokan tuloksilla.

Esittäen halpamaisia hulikaani- y.m. parjauksia maalasi Kusti

Pirhonen noskelaista sosialibatrioottista aatetta mitä
voimakkaimmilla pääväreillä, ollen tilaisuudessa esittämään
profveettamaisen itserakkautensa, ja vastaväittäjiä kohtaan kohdisti
ala-arvoisia sanasutkauksia.

Kun Simo Turtiainen antoi ymmärtää, että demokraatit tahtovat

rukoilemalla saavuttaa pikkuparannuksia, huusi puolinoske Heikki
Putkonen, että koska se on Turtiaisesta tullut asiantuntija, kun ei ole
tähän asti ymmärtänyt kuin ne kaksi asiaa, jotka äskensyntynyt
lapsikin osaa.

Muutamien nauraa räkättäessä kutsui puhemies Näppinen Heikki

Putkosen päiväjärjestykseen.
 Mari Kukkonen toi päivänvaloon vainotun punikkikansan
kiusaukset valkoisen tasavallan verivaakunan alla, saattaen esille
räikeitä ja kyynillisiä epäkohtia.

Puhemiehen huomautettua Mari Kukkoselle, että nyt on kysymys

noskelaisista eikä porvareista, kiljasi Mari Kukkonen, että mikä sinä
luulet olevasi määrääjä, mistä minä puhun.

Muutkin akat rupesivat huutamaan, että naisella on äänioikeus,

antaa
Mari Kukkosen puhua.

Melkoisen naurunrähäkän vallitessa sanoi puhemies Näppinen,

että voi hyvä isä, jos kuka saisi nuo akat riivatut pitämään turpansa
kiinni.

Justus Tiilikainen ehdotti, että ajetaan ne kahvilan puolelle, mikä

hyväksyttiin.

Merkittiin pöytäkirjaan, että muut akat lähtivät vastustelematta,

paitsi Kaisa Kompura, joka oli heitettävä, ja joka sitten vielä kävi
pirtin ovella pyllistämässä internaalille ja sen puhemiehelle.

Levollisuuden palattua jatkettiin asian käsittelyä

yhteistoimintamahdollisuuksista noskelaisten kanssa.

Justus Tiilikainen esiintoi perustellussa lausunnossa, että

kapitalismin raastamat työläiset kääntäisivät Kotolaisten
reformistiselle petturisakille selkänsä, ennenkuin joutuvat
kapitalismin jättiläiskäärmeen nieluelimistä alashotkaistuksi, mikä
muutamilta hyväksyttiin.
 Paavo Pellikka vänkäsi laajemmassa esitelmässä
noskelaisuuteen, sanoen Tiilikaisen sotkevan veden voidakseen
kalastaa sameudessa yksilöllisten tarkoitusperien hyväksi.

Tov. Tiilikaisen selvitettyä Pellikan roistomaista vääristelyä käytti

Heikki Putkonen pitemmän puheenvuoron, tarkoitusperänä kohottaa
työläisväestö luokkana laumakantaa korkeammalle.

Simo Turtiainen paljasti kuvaannollisia esimerkkejä porvarillisesta

oikeuspuntarista, joka noteeraa kommunistisille sanomalehdille
kuritushuonetta vallankumouksellisen totuuden puhumisesta.

Paavo Pellikka veti esiin näytöksiä sos. dem. lehdistä, että nämä
tuomitsevat ankarasti porvarillisen oikeuspuntarin, jos se tahtoo
takseerata tuomiota vallankumouksen valmistamisesta, mihin
sihteeri Mikko Tarjus liitti välihuudahduksen, että ne ovat vain
salataantumuksen grogotiilin mustia murhekyyneliä
vallankumouksellisen käsityksen hämäämiseksi.

Suuressa loppupuheessa teki puhemies Jerobeam Näppinen

yhteenvedon noskelaisten rötöksistä työväen pettämiseksi sekä
salaisesta suostuvaisuudesta vallankumouksen esitaistelijain
ohranoimiseen, todistaen kommunistisella tietoisuudella sos.-dem.
johtoherralurjusten inhoittavien taistelukeinojen ainoana tuloksena
olevan vain sen, että työväki jättää omiin hoteisiinsa nämä kurjat
ohranan kätyrit, jotka valta-asemansa pelastamiseksi eivät näe
muuta keinoa kuin usuttaa valkoisen taantumuksen mustat ohranat
työväenliikkeen kimppuun.

Puhemies Näppinen kysyi lopuksi, onko se kansan tahto, johon

kansa vastasi että on.
 Heikki Putkosen ja Paavo Pellikan lausuttua päivittelynsä kielsi
puhemies heitä puhumasta kansan tahtoa vastaan Pöllölässä.

Puhemiehen tiedusteltua, olisiko valittava pöytäkirjan tarkastaja,

vastasi kokous yksimielisesti, että tarkastakoon Mikko Tarjus, koska
on itse sen laatinutkin.

Poliisi Pekka Suova kysyi, eikö kokous jo pian lopu, mihin

puhemies vastasi, ettei tässä enää tule esille mitään
vallankumouksellista, niin että senpuolesta joudat kyllä lähteä, jos on
mihin kiire.

Poliisi Suova tiedusteli vielä, oliko kokouksen jälkeen pidettävissä

iltamissa erikoista ohjelmaa, minkä johdosta sihteeri Mikko Tarjus
ilmoitti, että liekö tuossa muuta kuin kintun vingutusta ja lattian
silitystä.

Poliisi Suova sanoi, että siispä jääkää terveeksi, Pöllölän

kommunistit, johon kokous vastasi, että hyvästi vain ja kiitoksia
seurasta.

Poliisin mentyä arveli Simo Turtiainen, että lieneekö sille nokkaan

käynyt haju noista Pussisen pojan limonaatipulloista, kun se siihen
suuntaan oppaili, mihin kansankerrokset vastasivat, että on tässä
tuvassa niin monensorttista hajua, ettei siitä poliisikoirakaan selvää
ottaisi.

Virallisen kokouksen päätyttyä otettiin esille kysymys parista

puolikuppisesta köyhälistön tiktatuurin kunniaksi.

Solutar Reeta Sinkkonen ilmoitti, että kahvia kyllä olisi, mutta

Pussisen pojan tuomiset ovat lopussa.
 Sihteeri Mikko Tarjuksen lausuttua läsnäolijain puolesta
kummastuksen tunteet Pussisen aikamiespojalle, ilmoitti mainittu
poika, että demokraateilla sitä kyllä olisi, kun ne varustivat sitä yli
oman tarpeen sinne Törkysen saunaan.

Sihteeri Mikko Tarjus ilmaisi otaksuman, etteivät nosket ole

halukkaat jakamaan kommunistien kanssa.

Puhemies Näppinen esitti valittavaksi kolmimiehisen komitean

laatimaan mietintöä siitä, mihin toimenpiteisiin olisi ryhdyttävä asian
valaisemiseksi.

Hyväksyen ehdotuksen valitsi kokous huutoäänestyksellä

komitean jäseniksi Jerobeam Näppisen puheenjohtajana, Mikko
Tarjuksen varapuheenjohtajana ja sihteerinä sekä Israel Huttusen
jäsenenä. Komitealle lausuttiin toivomus, että se valmistaisi
mietinnön nopeasti, hautaamatta sitä vihertävän veran alle.

Komitean puolesta vastasi Mikko Tarjus, että yhtä jano se on

meillä kuin teilläkin.

Komitea kokoontui heti porstuassa.

Viiden minuutin kuluttua esitti komitea internaateille ehdotuksen,

että valiokunta kommunistisia soluja saisi tehtäväkseen lähestyä
noskelaisia Törkysen saunassa yhteistoiminnan aikaansaamisen
nimessä valtiollisissa vaaleissa. Kokous ilmaisi myötätuntoista
kannatustaan yleisellä hölinällä.

Justus Tiilikainen ilmoitti vastustavansa kaikkia valtiollista

yhteistoimintaa koskevia neuvotteluja, viitaten yleispöllöläläisen
internaalin äsken tekemään päätökseen.
 Israel Huttunen huomautti sattuvasti, että kansalla, jolla on valta
sitoa, on myöskin valta päästää, joten läsnä olijat voivat vaikeuksitta
purkaa äskeisen päätöksen.

Sihteeri Mikko Tarjus selitti asiantuntemuksella, ettei sitä tarvitse

purkaakaan, vaan voi hän pöytäkirjaa tarkistaessaan jysteerata
päätöstä siihen suuntaan kuin vallankumouksellisen köyhälistön
tarpeet vaativat.

Kunniasolu Jerobeam Näppinen valaisi asiaa

vallankumouksellisen taktillisuuden merkeissä, koska ei Pöllölän
kommuunin tosiperäinen tarkoitus ole valtiollisen
yhteistoimintapohjan luominen aatteen pettäjien välille, vaan
ainoastaan tarpeellisen pirtun hankkiminen vallankumouksen
hyväksi, mille valtiolliselle kaukonäköisyydelle nähtiin
luokkatietoisten toverien ymmärtäväisesti virnuilevan.

Jerobeam Näppisen kysymykseen, olisiko se kansan tahto,

vastattiin yksimielisesti myöntäen.

Valtuutettiin ilman keskustelua äskeinen komitea ryhtymään

neuvotteluihin noskelaisten kanssa Törkysen saunassa.

Justus Tiilikaisen toivomukseen, ettei komitea antaisi

jesuiittamaisten noskelaisten pettää itseään, vakuutti komitea
tulevansa toimimaan vallankumouksellisen järjen selvässä valossa.

Pannen komitea tämän jälkeen hatut päähänsä ja lähtien matkalle

Törkysen saunaan.
 10 §.

Komitean lähdettyä esitti Justus Tiilikainen ulkopuolella

pöytäkirjan, eikö toveri Kuusinen olisi kutsuttava aitasta, koska poliisi
on mennyt matkaansa.

Kansa hyväksyi tämän yksimielisesti, ja valtuutettiin toveri

Tiilikainen noutamaan toveri Kuusisen aitasta.

Toveritar Reeta Sinkkonen esitti, että internaali tervehtisi toveri

Kuusista seisoalleen nousten, mikä hyväksyttiin.

Toveri Kuusisen tultua tupaan kunnioitti internaali häntä

seisoalleen nousten, mistä arvonannosta toveri Kuusinen lausui
Pöllölän vallankumoukselliselle internaalille liikutetun kommunistisen
kiitollisuutensa.

Toveri Tiilikainen pyysi kunniavierasta käymään pöydän päähän,

minkä johdosta toveri Kuusinen kysyi, oliko varmaa, että kaikki
läsnäolijat olivat luotettavia, ja eikö ollut mahdollista, että poliisi
Pekka Suova tai muut ohranat voivat odottamatta saapua paikalle.

Useat läsnäolijat lausuivat mielipiteenään, ettei se ole luultavaa ja

että kyllä tässä aina keinot keksitään, jos sattuisikin ohranoita
tulemaan.

Toveri Kuusinen, kun oli ensin keskusteltu arkipäiväisistä asioista

ja ohranan loukuista, ryhtyi kyselemään Pöllölän kommuunin
valtiollisesta valistustyöstä, ja kysyi tämän ohella sitäkin, onko
Pöllölän internaaleilla jo kommunistin katkesmusta.
 Tähän vastasivat läsnäolevat kieltävästi, minkä johdosta toveri
Kuusinen lausui surkuttelunsa, ilmaisten kommunistisen
katkesmuksen tärkeyden järkiperäisessä vallankumoustaistelussa
käsitteiden tosiperäiseksi selvittämiseksi vähemmän luokkatietoisille
kansanaineksille.

Tov. Simo Turtiainen myönsi, että olisihan se hyvä olla katkesmus,

mutta kun ei ole.

Toveri Kuusinen ilmoitti, ettei hänellä ole painettua katkesmusta

mukanaan, mutta että hän osaa sen ulkoa, joten se voidaan kirjoittaa
vaikka tänä iltana, jos tuonne aittaan nostetaan tuolta kahvilan
puolelta se pienempi pöytä ja läkkilamppu.

Toveritar Reeta Sinkkonen kiiruhti niiaten vakuuttamaan, että se

pöytä kyllä joutaa.

Tov. Kuusinen ilmoitti, että häneltä on käsi kipeänä, kun on

loukannut sen ohranan kynsistä paetessaan, mutta jos tämä Hilta
Kukkasjärvi, joka oli tuonut hänelle aittaan virvokkeita, tulisi hänelle
kirjuriksi, niin hän sanelisi sille.

Muutamat läsnäolevat todistivat Hilta Kukkasjärven hyvin

kirjoitustaitoiseksi, ja Justus Tiilikainen ilmoitti:

— Tämä Hilta kun on meidän kommuunin pikasihteeri Mikko

Tarjuksen morsian, niin tämähän se aina Mikollekin kirjoittaa
pöytäkirjat puhtaiksi.

Kaikkien läsnäolijain hyväksyttyä kommunistisella mielihyvällä

Hilta Kukkasjärven toveri Kuusisen sihteeriksi kommunistin
katkesmuksen toimitustyössä, nostettiin Reeta Sinkkosen pienempi
pöytä aittaan, minkä jälkeen toveri Kuusinen ja Hilta Kukkasjärvi
sulkeutuivat aittaan ja ottivat avaimen ovelta, ettei kukaan
iltamavieraista tulisi kurkistelemaan ja häiritsemään katkesmuksen
kirjoittamista, iltaman kun piti alkaa tunnin päästä.

Toveritar Kaisa Kompura sanoi takaisin tupaan tultua, että mitähän

se Mikko Tarjus meinaa, kun kuulee morsiamensa olevan lukon
takana kahden kesken tuntemattoman miehen kanssa. Tälle
aiheettomalle huomautukselle kuultiin useiden miesten päästävän
ala-arvoisen naurunhörinän.

Tov. Justus Tiilikainen nuhteli Kaisa Kompuraa kiivaasti

epäkommunistisesta puhetavasta ja toveri Kuusisen kunnian
loukkaamisesta halpa-arvoisella epäluulolla, jolloin toveritar Kaisa
Kompura alkoi räkättää vastaan ja haukkua tov. Tiilikaista
kerrassaan epäparlamenttaarisella tavalla.

Justus Tiilikaisen haukkuessa vastaan ja yleisen tunnelman

uhatessa täten joutua häiriöön käskivät useat karjuen kumpaakin
pitämään turpansa kiinni.

Toveritar Reeta Sinkkonen sanoi vallankumouksellisen köyhälistön

sankarien olevan kaikkien epäluulojen yläpuolella akallisissa
asioissa, koska he elävät aatteellisuuden ilmakehässä.

Justus Tiilikaisen sanottua rumasti Kaisa Kompurasta ja lausuttua,

että Kaisa itse olisi halunnut sinne aittaan, jos olisi huolittu, vaikka
silloin kyllä olisivat kirjoitusneuvot olleet tarpeettomat, sylki toveritar
Kaisa Kompura toveri Justus Tiilikaista vasten kuonoa ja yritti repiä
silmät hänen päästään, mikä vastavallankumouksellinen toiminta
saatiin toisten toverien väliintulolla ehkäistyksi.
 Tov. Aatami Lötjönen, joka oli lähtenyt Törkysen saunan taakse
kuuntelemaan, palasi ilmoittaen, että neuvottelut yhteisestä
rintamasta sujuvat täysin lojaalisti, koska komitean jäsenet
Näppinen, Huttunen ja Tarjus jo ryyppäävät samasta pullosta
noskelaisten kanssa.

Muutamat luokkatietoisista tovereista lausuivat epäilyksen, että

komitea saattaa kukaties jäädä sinne yhteiselle rintamalle koko
illaksi, minkä johdosta yksimielisesti päätettiin lähettää Pussisen
poika hakemaan komiteaa kotiin, ellei sitä pian alkaisi kuulua.

Toveritar Reeta Sinkkosen sytyttäessä tuvan katossa olevaa

lamppua, koska jo alkoi hämärtää, palasi komitea Törkysen saunalta
omasta alotteestaan ja vapaasta tahdostaan.

Kansan syvien rivien kysymykseen, kuinka lähetystö oli onnistunut

tehtävässään, vastasi puhemies Jerobeam Näppinen jossain määrin
sammaltaen, että lähetyskunta oli onnistunut kiitettävästi kaikin
puolin ja että sovinnollinen yhteistoiminta vallankumouksellisen
proletaarin molempien siipien välillä on saanut tosiperäisen
perustuksen.

Justus Tiilikaisen kysymykseen, olivatko nosket asettaneet joitakin

ehtoja puolestaan yhteistyötä varten, ilmoitti Israel Huttunen parin
nikotuskohtauksen keskeyttämänä noskelaisten päävaatimuksen
olevan, että kommunistit lakkaavat vaalitaistelun ajaksi kiihotuksesta
noskelaiskoplaa vastaan.

Tov. Tiilikaisen seuraavaan tiedusteluun, oliko komitea mennyt

antamaan siinä suhteessa mitään lupauksia, vastasi kunniasolu
Näppinen ensin kieltäen, mutta sitten, asiaa tarkemmin muisteltuaan,
kolmasti myöntäen.
 Justus Tiilikainen ilmoitti tämän johdosta vastalauseensa,
esiintuoden vallankumouksellisen taktillisuuden valossa, ettei
komitealla ollut sellaiseen lupaukseen mitään ehdotonta oikeutta.

Israel Huttusen kiellettyä tov. Tiilikaista puhumasta

vallankumouksen nimessä esitti Justus Tiilikainen, että kokous
huutaisi alas komitean, mihin suuri enemmistö karjuen yhtyi,
leimaten komitean menettelyn kansan pettämiseksi.

Sihteeri Mikko Tarjus otti taskuistaan kolme noskelaisilta saatua

täysinäistä putelia, ilmoittaen niistä pääsevän osallisiksi vain niiden,
jotka yhtyvät kannattamaan komitean menettelytapaa, koska
noskelaiset ovat myöntäneet nämä putelit nimenomaan mielialan
muokkaamista varten kommunistien keskuudessa.

Tämän ilmoituksen johdosta syntyneen pitkän ja synkän

vallankumouksellisen äänettömyyden aikana asettui komitea pöydän
ääreen, asettaen pullot eteensä, minkä jälkeen puhemies Näppinen,
siveltyään muutamia kertoja kämmenellä kasvojaan ja pyyhittyään
suupieliään, esitti Pöllölän vallankumouksellisen köyhälistön
vastattavaksi, nauttiiko neuvotteleva komitea luottamusta, ja onko
saapuvilla ketään, joka sihteeri Tarjuksen ilmoituksen kuultuaan
edelleenkin tahtoo leimata komitean menettelyn kansan
pettämiseksi?

Mikko Tarjuksen ottaessa korkkiruuvin taskustaan ja alkaessa

hitaasti vetää korkkia auki yhdestä putelista pyysi toveri Kusti
Pirhonen puheenvuoroa ja lausui mielipiteenään, että kokouksen
taholta on tapahtunut väärinkäsitys ja että Pöllölän
vallankumouksellinen internaali, ottaen huomioon
vallankumouksellisen joukkotahdon ahdistetun aseman
lahtariyhteiskunnassa ja komitean jäsenten yleisesti tunnustetut
suuret ansiot internaalissa, mielenylevyydellä hyväksyy komitean
toimenpiteet yhteisen rintaman luomiseksi porvarillista
ohranamaisuutta vastaan sekä luopuu kaikesta kiihoituksesta
noskelaisia vastaan.

Puhemiehen kysymykseen, onko tämä kansan tahto, vastasi

kokous jyrisevällä huutoäänestyksellä myöntävästi.

Puhemiehen kysymykseen, katsooko Pöllölän internaali, että

toveri Justus Tiilikainen on kenkku ja että hän on yrittänyt antaa
iskun vallankumouksen selkään, vastattiin niinikään myöntävästi
kaikilla äänillä tov. Tiilikaisen ääntä vastaan.

Toveritar Reeta Sinkkonen ilmoitti, että koska iltamavieraita alkaa

jo keräytyä pihalle, olisi internaalin siirryttävä pulloineen kahvilan
puolelle, mikä hyväksyttiin.

11 §.

Pöllölän kommunistisen internaalin sijoituttua kahvilan puolelle

nauttimaan noskelaisilta saatuja virvokkeita kysyi sihteeri Tarjus
ulkopuolella päiväjärjestyksen, minne kahvilan pienempi pöytä on
viety, sekä missä hänen morsiamensa Hilta Kukkasjärvi on?

Tähän välikyselyyn vastasi internaalin puolesta toveri Kusti

Pirhonen, tehden lyhyesti ja selväpiirteisesti selkoa toveri Kuusisen
kirjallisesta toiminnasta ja kommunistin katkesmuksesta.

Mikko Tarjuksen kysymykseen, mitä tekemistä Hiltalla siellä

aitassa on, vastattiin seikkaperäisellä selvityksellä toveri Kuusisen
kipeästä kädestä.

Koska Tov. Mikko Tarjus tällöin puhkesi kommunistisiin sadatuksiin

ja uhkasi lähteä vaatimaan Hiltaa pois aitasta, ryhtyivät useat
läsnäolijat rauhoittamaan Mikko Tarjusta, leimaten selvässä valossa
hänen aikomuksensa sopimattomaksi yleisen luokkataistelun
kannalta.

Puhemies Näppinen todisti vastustamattomasti, että koska toveri

Kuusinen kerran tarvitsee sihteeriä, niin täytyy Pöllölän internaalien
kustantaa hänelle sihteeri kommunistin katkesmuksen toimittamista
varten.

Mikko Tarjus, iskien nyrkillä pöytään, sanoi ei ymmärtävänsä,

miksi juuri Hiltan täytyy sihteerinä olla, ja lupasi itse ryhtyä Kuusisen
kirjuriksi.

Eräät Pöllölän luokkatietoiset internaalit vastasivat tähän ikeniänsä

irvistellen tov. Tarjuksen jo olevan siinä kypsyyden tilassa, ettei
hänellä pysy kynä näpissä, minkä johdosta nähtiin Mikko Tarjuksen
vihaisesti vääntelevän silmiään.

Muutamien nauraessa sanoi Kaisa Kompura ilkeästi

mielipiteekseen toveri
Kuusisen varmasti pitävän mieluummin sihteerinään Hiltaa kuin
Mikko
Tarjusta.

Toveri Mikko Tarjus yritti tämän johdosta nousta ylös, mutta

painoivat Israel Huttunen ja Kusti Pirhonen hänet jälleen istumaan ja
käskivät hänen olla siivolla.
 Puhemies Näppinen selvitti rauhoittavasti kommunismin
hengessä, että jos vallankumouksen johtomiehet tahtovat meiltä
esimerkiksi morsiamet tai vaikka akatkin, niin on ne heille
luovutettava aatteen mukaisesti tarkoitusperiä varten, niinkuin
Venäjälläkin, koska kommunistin aatteena on omaisuuden yhteys, ja
nuhteli tov. Tarjusta hänen pikkumaisuutensa johdosta yhteisessä
asiassa, missä yksilön onni on vähäpätöinen.

Toveri Tarjus, ryhtyen metelöimään, ilmoitti antavansa kirkkaan

pirun sellaiselle vallankumoukselle.

Kun ilmeni, ettei toveri Tarjus tahtonut kuulla vallankumouksellisen

järjen ääntä, ehdotti puhemies Näppinen hänelle annettavaksi
kommunistisen varoituksen, mikä hyväksyttiin.

Tov. Tarjus sanoi, ettei hän ota semmoisen seurapiirin varoituksia

huomioonsa, minkä johdosta läsnäolijat lausuivat tov. Tarjukselle
kummastuksensa, jota ei voitu merkitä pöytäkirjaan, ollen se tov.
Tarjuksen taskussa.

Kaisa Kompura sanoi Mikko Tarjukselle toivovansa, ettei Hilta

Kukkasjärvi siitä paljon pahene, vaikkapa onkin yhden illan vieraan
miehen kanssa lukon takana aitassa katkesmuksen teossa, minkä
johdosta jotkut internaalit äänekkäästi karjuen käskivät Kaisa
Kompuran pitää suunsa kiinni ja laputtaa pellolle.

Useiden toverien vannottaessa Mikko Tarjusta uhraamaan

tilapäisesti rakkautensa vallankumouksen alttarille, vaikkapa toveri
Kuusisella olisikin joitakin sivutarkoituksia Hiltaan nähden, puhkesi
tov. Tarjus kyyneleihin ja ilmoitti olevansa luokkataistelun uhri.
 Koska tov. Tarjus hetken kuluttua putosi pöydän alle, annettiin
hänen nukkua siellä, kun ei muuallakaan ollut tilaa.

Tämän jälkeen ryhdyttiin vilkastuvan mielialan vallitessa

keskustelemaan kommunistin katkesmuksen käytäntöön
ottamisesta, ja ehdotti puhemies Näppinen, että toverit esittäisivät
mielipiteensä.

Tov. Lötjönen murahti, että kommunistin katkesmus on aivan

lojaali asia jokaiselle luokkatietoiselle kommunistille, jonka tähden
sitä olisi kannatettava.

Tov. Israel Huttunen, tehden laajaperäisesti selkoa kirkon

pimitystyöstä ja kinkerien käyttämisestä kansan orjuuttamiseen sekä
selväpiirteisen valistuksen hämäämiseen, esitti että kommunistin
katkesmus hyväksyttäisiin käytäntöön ensi kuun alusta, mihin
kokous vastasi myöntävästi.

Reeta Sinkkosen kysymykseen, olisko opeteltava koko katkesmus

ulkoa, vastattiin laajan puheenvaihdon jälkeen, mikä välistä muuttui
yleislaatuiseksi hölinäksi, ettei tarvitse lukea muuta kuin kymmenet
käskyt ja uskontunnustukset ulkoa, mutta muuten kunhan tietää
kertoa pääkohdat.

Valtuutettiin tov. Israel Huttunen kommunisterin arvolla pitämään

syksyllä kommunistiset kinkerit, joissa kuulustelee luokkatietoiselta
proletaarilta katkesmuksen taitoa.

Tov. Lötjösen ilmoitettua, ettei hän osaa oikein lojaalisti lukea,

päätettiin äänten enemmistöllä, ettei hänen tarvitse opetella muuta
kuin uskontunnustus, minkä Reeta Sinkkonen hänelle takokoon
päähän.
 Tov. Lötjönen lausui toivomuksenaan, että uskontunnustus ei olisi
lojaalia pitempi, mihin Kaisa Kompura muutamien nauraa
räkättäessä huusi, että jos ne siellä aitassa koko ajan
uskontunnustusta tekevät, niin riittää siinä sinulle opettelemista sivu
ensi pääsiäisenkin.

12 §.

Kommunistisen yleispöllöläläisen internaalin iltamat pidettiin

samana iltana samassa paikassa vaihtelevalla ohjelmalla.

Tilaisuuteen oli saapunut runsaasti luokkatietoista internaalia kuin

myöskin noskelaisia, sekä sellaistakin väkeä, joka ei vielä ole
herännyt täyteen vallankumoukselliseen tietoisuuteen, vaan liikkuu
vielä porvärillisen valhevaipan nukuttavien sumusireeniäänien
lumoissa.

Kun suuri osa yleisöä oli asettunut paikoilleen tuvassa, katselivat

kaikki ympärilleen, nähdäkseen toveri Kuusisen, jonka saapumisesta
salainen sana oli levinnyt laajoihin uskottuihin kerroksiin, ja
tähystelivät useat kunnioittavasti etenkin uunille, kunnes saatiin
kuulla kuiskaus toveri Kuusisen olevan aitassa kirjallisissa
toimenpiteissä.

Puhemies Näppisen tuntiessa itsensä väsyneeksi piti

tervehdyspuheen tov. Justus Tiilikainen, kosketellen järjestötoimintaa
vallankumouksellisessa hengessä, ja havaittiin avauspuheen pitäjän
kasvonpiirteissä mitä vakavimpia ilmeitä, hänen sanoessaan että
hän olisi tahtonut puhua kaiken mitä ajatteli, katsellessaan sitä
suurilukuista nuorisoparvea, mikä harhailee ulkopuolella järjestöjen.
Siirtyen sitten puhumaan noskelaisista ilmoitti puhuja, että
noskelaisten ohjelmassa ilmenevät perusjuonet ovat ilmianto,
provokatsiooni, oman mädännäisyytensä peittäminen ja
tietämättömien joukkojen tunnoton pimittäminen ja uskotteleminen,
jotka ovat tämän kuolemaantuomitun liikkeen viimeisiä,
kouristuksentapaisesti nytkähteleviä elonmerkkejä.

Puhujan ennätettyä näin pitkälle keskeyttivät ylvästelevät nosket

esityksen mitä raakamaisimmalla jalkojen töminällä ja pehmeäksi
keitetyllä nauriilla, joka lätkähti keskelle puhujan otsaa, leviten
ympäri naamaa, ja matkaansaattoi ilkeän naurun-ulvonnan ei
ainoastaan noskelaisissa, vaan eräissä vähemmän valistuneissa
kommunisteissakin.

Kun toveri Tiilikainen, pyyhkien naurismuhennosta otsaltaan,

poskiltaan ja leuastaan, oli astunut pois puhujan paikalta ja tämän
häpeällisen attentaatin nostama meteli oli vähän asettunut, lausui
Reeta Sinkkonen tunnelmallisella taidolla runon »Työn orjat», mitä
tervehdittiin vilkkailla kättentaputuksilla.

Tämän jälkeen seurasi ohjelmassa yleinen tanssi hanurin

säestyksellä, minkä aikana muutamat korven kyynelistä liikutetut
pikkunosket tekivät paheksittavaa ilkivaltaa ulkona pihalla, nostaen
rappuset pois oven edestä ja jyskyttäen haloilla seiniä.

Myöskin oli joku heistä iltamapirtin ovella seisten kysellyt,

kumpaako kansa tahtoo, pimeyttä vaiko valkeutta, katsellen
sääliväisesti katossa palavaa lamppua ja poistuen sitten ulos
myrtyneen näköisenä, lamppuun koskematta.
 Reeta Sinkkosen kysymykseen, missä järjestysmiehet ovat, kun
eivät ole hoitamassa virkaansa, ilmoitti Kaisa Kompura asiaan
perehdyttyään järjestysmiesten nukkuvan saunan lauteilla ja ettei ole
mahdollista saada heitä hereille.

Koska kahvilanpuolella oli vesiämpäri kaatunut permannolle, niin

että sihteeri Mikko Tarjus oli kastunut selkäpuoleltaan märäksi näin
syntyneessä lätäkössä, oli toveri Tarjus herännyt pöydän alla,
noussut ylös ja ryhtynyt kuivailemaan selkäänsä hellan edessä.

Tällöin tuli Kaisa Kompura, joka oli vähäväliä liikkunut ulkona

huomioita tekemässä, sisään ja sanoi kovalla äänellä, että niillä
katkesmuksen kirjoittajilla mahtaa olla kissan silmät, kun näkevät
pimeässäkin kirjoittaa ja ovat sammuttaneet lampun.

Tämän johdosta päästi toveri Mikko Tarjus niin kovan kirouksen,

että se kuului yli tanssin jytkytyksen, ja läksi syöksymään ulos.

Koska näytti olevan pelättävissä väkivaltaisuutta tov. Kuusista

kohtaan tov. Tarjuksen taholta, ryhtyivät Simo Turtiainen ja Jerobeam
Näppinen estämään Mikko Tarjusta, jolloin kaikki kolme iltamayleisön
huutaessa vyöryivät ulos ovesta ja putosivat päistikkaa alas
kynnykseltä edellämainitun, portaille tehdyn ilkivaltaisuuden
johdosta.

Tässä putouksessa onnistui Mikko Tarjuksen päästä irti Jerobeam

Näppisen ja Simo Turtiaisen käsistä, ja juosten aitan ovelle alkoi
Mikko Tarjus, monisanaisesti kiroillen, perkaa ovea nyrkeillään,
vaatien, niinkuin sanat kuuluivat, päästä varajäseneksi
katkesmuskomiteaan.
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