Question

Shakti Ltd. invited applications for 60,000 shares of ₹ 100 each issued at 20% premium. Issue price was payable as ₹ 50 on application (including premium), ₹ 40 on allotment and balance on the first and final call. Applications were received for 80,000 shares. Out of the Application Money received, ₹ 2,00,000 were returned and ₹ 8,00,000 were applied to the amount due on allotment. All shareholders paid the call money, with the exception of one shareholder of 15,000 shares. These shares were forfeited and 80% of these shares were reissued as fully paid at ₹ 70 per share.

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

1. Excess Application money on ______ shares is adjusted towards Share Allotment Account.
   1. 16,000.
   2. 12,000.
   3. 14,000.
   4. 10,000.
2. On forfeiture of shares, Share Capital Account will be debited with
   1. ₹ 18,00,000
   2. ₹ 15,00,000
   3. ₹ 10,00,000
   4. ₹ 12,00,000
3. What amount will be credited to Shares Forfeited Account at the time of forfeiture of 15,000 shares?
   1. ₹ 1,50,000
   2. ₹ 13,50,000
   3. ₹ 10,50,000
   4. ₹ 15,00,000
4. At the time of reissue of forfeited shares, how much amount will be debited to 'Shares Forfeited Account'?
   1. ₹ 8,00,000
   2. ₹ 3,60,000
   3. ₹ 4,50,000
   4. ₹ 10,00,000
5. ______ will be debited to Bank Account at the time of reissue of forfeited shares.
   1. ₹ 10,50,000
   2. ₹ 8,40,000
   3. ₹ 12,00,000
   4. ₹ 15,00,000
6. What amount will be transferred to Capital Reserve?
   1. ₹ 4,50,000
   2. ₹ 4,70,000
   3. ₹ 4,80,000
   4. ₹ 6,00,000

Answer 1

(A) 16,000

Explanation:

Applications rejected for 4,000 shares, i.e., ₹ 2,00,000/₹ 50.

Excess application money adjusted on share allotment = 80,000 – 60,000 – 4,000 = 16,000 shares.

(B) ₹ 15,00,000.

Explanation:

15,000 × ₹ 100 = ₹ 15,00,000.

(C) ₹ 10,50,000.

Explanation:

No. of forfeited shares × Amount paid per share

= 15,000 × ₹ 70 = ₹ 10,50,000.

(D) ₹ 3,60,000

Explanation:

(12,000 × ₹ 30)

(E) ₹ 8,40,000,

Explanation:

₹ 8,40,000, i.e., 12,000 (i.e., 80% of 15,000) × ₹ 70.

(F) ₹ 4,80,000

Explanation:

Calculation of Amount transferred to Capital Reserve:	₹
Amount forfeited on reissued shares (12,000 × ₹ 70	8,40,000
Less: Reissue discount (12,000 × ₹ 30)	3,60,000
Gain on reissue to be transferred to Capital Reserve	4,80,000