Question

Grow More Capital Ltd. invited applications for 1,00,000 Equity shares of ₹ 10 each, payable ₹ 2 on application, ₹ 3 on allotment and the balance on first and final call. Applications were received for 3,00,000 shares and the shares were allotted on pro rata basis. Mohan, a shareholder, who had applied for 3,000 shares did not pay the call money and his shares were forfeited and later reissued at ₹ 8 per share as fully paid.

Answer the following questions on the basis of the above information:

1. State the amount of excess application money refunded to the applicants.
   1. ₹ 50,000
   2. ₹ 1,00,000
   3. ₹ 1,20,000
   4. ₹ 1,50,000
2. State the excess application money adjusted in Shares Allotment Account.
   1. ₹ 1.50.000
   2. ₹ 2,00,000
   3. ₹ 2,50,000
   4. ₹ 3,00,000
3. State the amount received towards Shares Allotment Account.
   1. ₹ 2,00,000
   2. ₹ 2,50,000
   3. ₹ 3,00,000
   4. Nil.
4. State the amount forfeited at the time of forfeiture of Mohan's shares.
   1. ₹ 4,000
   2. ₹ 4,500
   3. ₹ 5,000
   4. ₹ 6,000
5. State the amount credited to 'Calls-in-Arrears'at the time of forfeiture of shares.
   1. ₹ 4,000
   2. ₹ 4,200
   3. ₹ 4,500
   4. ₹ 5,000
6. State the amount transferred to Capital Reserve.
   1. ₹ 2,000
   2. ₹ 2,500
   3. ₹ 3,000
   4. ₹ 3,500

Answer 1

(A) ₹ 1,00,000

Explanation:

Application money received:

3,00,000 × ₹ 2 = ₹ 6,00,000

Application money required:

1,00,000 × ₹ 2 = ₹ 2,00,000

Excess application money = ₹ 4,00,000. Out of this, ₹ 3,00,000 is adjusted towards allotment, so:

₹ 4,00,000 − ₹ 3,00,000 = ₹ 1,00,000

(B) ₹ 3,00,000

Explanation:

Allotment money due:

1,00,000 × ₹ 3 = ₹ 3,00,000

Since excess application money is ₹ 4,00,000, the entire allotment amount of ₹ 3,00,000 is adjusted from it.

(C) Nil

Explanation:

The entire allotment amount of ₹ 3,00,000 is adjusted against excess application money. Therefore, no separate amount is received towards allotment.

(D) ₹ 5,000

Explanation:

Shares were allotted in the ratio:

3,00,000 : 1,00,000 = 3 : 1

Mohan applied for 3,000 shares, so he was allotted:

`(3,000)/3 = 1,000` shares

Amount received on application and allotment:

1,000 × (₹ 2 + ₹ 3) = ₹ 5,000

(E) ₹ 5,000

Explanation:

First and Final Call per share:

₹ 10 − (₹ 2 + ₹ 3) = ₹ 5

Mohan did not pay the call on 1,000 allotted shares:

1,000 × ₹ 5 = ₹ 5,000​

(F) ₹ 3,000

Explanation:

Forfeited amount = ₹ 5,000

Loss on reissue:

1,000 × (₹ 10 − ₹ 8) = ₹ 2,000

Therefore:

₹ 5,000 − ₹ 2,000 = ₹ 3,000​