Question

'Bliss Products Ltd.' invited applications for issuing 1,00,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows: On Application - (₹ 3 per share (including premium ₹ 1) On Allotment - (₹ 4 per share (including premium ₹ 1) On First Call - ₹ 3 per share On Second and Final Call - Balance amount Applications were received for 1,90,000 shares. Allotment was made to the applicants as follows: Category No. of Shares Applied No. of Shares Allotted I 50,000 40,000 II 1,00,000 60,000 Remaining applications were refused allotment. Rajat, a shareholder in Category I who had applied for 2,500 shares, failed to pay the allotment money and first call. His shares were forfeited. Reema, a shareholder belonging to Category II who was holding 3,000 shares, failed to pay the first calland second call money. Her shares were also forfeited. Afterwards 4,000 shares were reissued @ ₹ 8 per share fully paid-up. These included all the forfeited shares of Reema.

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

1. How much excess application money is adjusted to share allotment?
   1. ₹ 1,30,000
   2. ₹ 1,40,00
   3. ₹ 1,50,000
   4. ₹ 1,60,000
2. How much excess application money is refunded?
   1. ₹ 1,00,000
   2. ₹ 1,20,000
   3. ₹ 1,40,000
   4. ₹ 1,60,000
3. How much amount is received on allotment?
   1. ₹ 2,40,000
   2. ₹ 2,42,000
   3. ₹ 2,43,500
   4. ₹ 2,50,000
4. How much amount will be credited to 'Forfeited Shares Account' at the time of forfeiture of Rajat's Shares?
   1. ₹ 5,000
   2. ₹ 5,500
   3. ₹ 5,700
   4. ₹ 6,000
5. How much amount will be transferred to Capital Reserve?
   1. ₹ 8,500
   2. ₹ 9,000
   3. ₹ 9,500
   4. ₹ 9,750
6. What will be the balance in Forfeited Shares Account after reissue of shares?
   1. ₹ 2,500
   2. ₹ 2,650
   3. ₹ 2,750
   4. ₹ 2,850

Answer 1

(A) ₹ 1,50,000

Explanation:

Category I:

(50,000 − 40,000) × ₹ 3 = ₹ 30,000

Category II:

(1,00,000 − 60,000) × ₹ 3 = ₹ 1,20,000

Therefore:

₹ 30,000 + ₹ 1,20,000 = ₹ 1,50,000​

(B) ₹ 1,20,000

Explanation:

Applications received = 1,90,000 shares. Applications relating to 1,50,000 shares were considered for allotment, while applications for the remaining 40,000 shares were rejected.

40,000 × ₹ 3 = ₹ 1,20,000

(C) ₹ 2,43,500

Explanation:

Allotment money due:

1,00,000 × ₹ 4 = ₹ 4,00,000

Less: Excess application money adjusted = ₹ 1,50,000.

Rajat applied for 2,500 shares in Category I and was allotted:

`2,500 xx (40,000)/(50,000) = 2,000` shares

His allotment due = ₹ 8,000 and excess application adjusted = ₹ 1,500. Therefore, unpaid allotment:

₹ 8,000 − ₹ 1,500 = ₹ 6,500

Amount received:

₹ 4,00,000 − ₹ 1,50,000 − ₹ 6,500 = ₹ 2,43,500​

(D) ₹ 5,500

Explanation:

Rajat was allotted 2,000 shares. Capital received on application:

2,000 × ₹ 2 = ₹ 4,000

Excess application money adjusted towards allotment = ₹ 1,500.

₹ 4,000 + ₹ 1,500 = ₹ 5,500

(E) ₹ 9,750

Explanation:

Reema's 3,000 forfeited shares were all reissued. Amount forfeited on them:

3,000 × ₹ 5 = ₹ 15,000

Out of Rajat's 2,000 forfeited shares, 1,000 were reissued. Proportionate forfeited amount:

`5,500 xx (1,000)/(2,000) = 2,750`

Total forfeiture amount relating to 4,000 reissued shares:

₹ 15,000 + ₹ 2,750 = ₹ 17,750

Loss on reissue:

4,000 × (₹ 10 − ₹ 8) = ₹ 8,000

Capital Reserve:

₹ 17,750 − ₹ 8,000 = ₹ 9,750​

(F) ₹ 2,750

Explanation:

Rajat's total forfeiture amount = ₹ 5,500. Half of his 2,000 shares, i.e. 1,000 shares, were reissued.

Balance relating to the remaining 1,000 shares:

`5,500 xx (1,000)/(2,000) = 2,750`