Question

Ruby limited invited applications for 1,00,000 shares of ₹10 each at a premium of 30% payable as follows: On Application ₹4 On Allotment ₹5 On First Call ₹2 On Second and Final Call ₹2 The public subscribed for two times the shares that were offered by the company. The directors decided to allot the shares to all the applicants on a pro-rata basis. Santosh who had applied for 6,000 shares, did not pay anything after the Application. Her shares were forfeited after the final call. 50% of the forfeited shares were reissued to Ashok as fully paid in such a manner that ₹1,500 were transferred to Capital Reserve A/c.

What amount will be received by Ruby Ltd. at the time of Allotment?

विकल्प

• ₹7,70,000

• ₹4,85,000

• ₹97,000

• ₹85,000

Answer 1

₹97,000

Explanation:

Excess Application money paid by Santosh: 3,000 × ₹4 = ₹12,000

Amount Due on Allotment = 3,000 × ₹5 = ₹15,000

Out of which, 3,000 × 2 = 6,000 is for Capital Portion

3,000 × 3 = ₹9,000 is for Premium Portion

Therefore, of the approximately ₹12,000 excess application, 6,000 is corrected for the capital element, and the remaining ₹6,000 is adjusted for the premium.

Entry on Forfeiture:

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c     ...Dr.		30,000
	Securities Premium A/c     ...Dr.		3,000
	To Calls in Arrears (Allotment ₹3,000; First Call ₹6,000; Second Call ₹6,000)			15,000
	To Share Forfeiture A/c			18,000
2.	Bank A/c (1,500 x ₹5)     ...Dr.		7,500
	Share Forfeiture A/c     ...Dr.		7,500
	To Share Capital A/c			15,000

Forfeited Amount on 1,500 shares is `18000xx1500/3000 = 9000`

Out of this, ₹1,500 is to be transferred to Capital Reserve; Hence, shares may be reissued at a discount of ₹7,500 i.e., ₹5 per share.