Question : XYZ Ltd. invited applications for issuing 1,00,000 equity shares of Rs. 10 each at par. The amount was payable as follows:
On Application— Rs. 3 per share;
On Allotment— Rs. 4 per share; and
On First and Final Call— Rs. 3 per share.
The issue was oversubscribed by three times. Applications for 20% shares were rejected and the money refunded. Allotment was made to the remaining applicants as follows:
| Category | No. of Shares Applied | No. of Shares Allotted |
| I | 1,60,000 | 80,000 |
| II | 80,000 | 20,000 |
Excess money received with applications was adjusted towards sums due on allotment and first and final call. All calls were made and were duly received except the final call by a shareholder belonging to Category I who has applied for 320 shares. His shares were forfeited. The forfeited shares were reissued at Rs. 15 per share fully paid-up.
Question:- What is the amount to be transferred to Capital Reserve?
Option 1: Rs.1,120
Option 2: Rs.1,920
Option 3: Rs.800
Option 4: None of the above
Correct Answer: Rs.1,120
Solution : Answer = Rs.1,120
|
1. Adjustment of Application Money: |
Rs. |
|
Application money received on shares applied (3,00,000 x Rs. 3) |
9,00,000 |
|
Less: 20% applications rejected (20% of 3,00,000, i.e., 60,000 x Rs. 3)—Refunded (A) |
1,80,000 |
|
7,20,000 |
|
|
Less: Application money adjusted on allotted shares (1,00,000 x Rs. 3) |
3,00,000 |
|
(Category I and II) |
|
|
Excess Application money (Category I and II) |
4,20,000 |
|
2. Adjustment of Excess Application Money: |
Rs. |
|
Category 1: Application money received (1,60,000 x Rs. 3) |
4,80,000 |
|
Less: Application money adjusted on allotted shares (80,000 x Rs. 3) (C) |
2,40,000 |
|
Excess application money |
2,40,000 |
|
Less: Excess application money to be adjusted on allotment |
2,40,000 |
|
Surplus |
Nil |
|
Category II: Application money received on shares applied (80,000 x Rs. 3) Less: Application money due on shares allotted (20,000 x Rs. 3) |
. 2,40,000 60,000 |
|
|
Excess Application money Less: Amount to be adjusted on Allotment (20,000 x Rs. 4) (D) |
80,000 |
1,80,000 |
|
Amount to be adjusted on first and final call (20,000 x Rs. 3) (E) |
60,000 |
1,40,000 |
|
Excess Amount to be refunded (B) |
40,000 |
• Total Application Money Refunded (A + B) = Rs. 1,80,000 + Rs. 40,000 = Rs. 2,20,000.
• Excess Application Money to be adjusted on Allotment (C + D) = Rs. 2,40,000 + Rs. 80,000 = Rs. 3,20,000.
• Excess Application Money to be adjusted on First and Final Call (Calls-in-Advance) = Rs. 60,000 (E).
3. Shares are reissued at premium, discount on reissue is Nil.Therefore, total amount of Rs. 1,120 credited to Forfeited Shares Account is capital gain and is transferred to Capital Reserve Account.
Hence, the correct option is 1.
Answer laterQuestion : Narain Ltd. invited applications for issuing 7,500, 12% Debentures of Rs.100 each at a premium of Rs.35 per debenture. The full amount was payable on application. Applications were received for 10,000 debentures. Applications for 2,500 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants.
Bank account will be debited by ___________.
Option 1: Rs 13,50,000
Option 2: Rs 7,50,000
Option 3: Rs 10,12,500
Option 4: None of the above
Correct Answer: Rs 13,50,000
Solution : Answer = Rs 13,50,000
Bank A/c Dr 13,50,000
To Deb. Application and allotment A/c 13,50,000
(10,000 debentures x 135)
Hence, the correct option is 1.
Question : A company invited applications for 50,000 Equity Shares of Rs. 10 each payable as follows:
On application Rs. 3; on allotment Rs. 3; on first and final call Rs. 4.
Applications were received for 1,10,000 shares. It was decided
(i) to refuse allotment to the applicants for 10,000 shares,
(ii) to allot 50% to X who has applied for 20,000 shares,
(iii) to allot in full to Y who has applied for 10,000 shares,
(iv) to allot balance of the available shares on pro-rata basis among the other applicants, and
(v) to utilise excess application money in part payment of allotment and final call.
Question:- Total application money will refund will be:
Option 1: Rs. 60,000
Option 2: Rs. 30,000
Option 3: Rs. 1,50,000
Option 4: Rs. 20,000
Correct Answer: Rs. 30,000
Solution : Answer = Rs. 30,000
STATEMENT SHOWING DETAILS OF SHARES APPLICATION MONEY
|
Categories |
Shares |
Shares |
Application |
Disposal of Shares Application Money Received |
|||
|
Applied |
Allotted |
Money |
Share |
Shares |
Calls-in- |
Refund |
|
|
Received |
Capital |
Allotment |
Advance |
||||
|
Rs. |
Rs. |
Rs. |
Rs. |
Rs. |
|||
|
1 (Rejected) |
10,000 |
NIL |
30,000 |
30,000 |
|||
|
(10,000 x Rs.3) |
|||||||
|
II X |
20,000 |
10,000 |
60,000 |
30,000 |
30,000 |
||
|
(20,000 x Rs. 3) |
(10,000 x Rs. 3) |
(10,000 x Rs. 3) |
|||||
|
III Y |
10,000 |
10,000 |
30,000 |
30,000 |
|||
|
(10,000 x Rs. 3) |
(10,000 x Rs. 3) |
||||||
|
IV (Prorata) |
70,000 |
30,000 |
2,10,000 |
90,000 |
90,000 |
30,000 |
|
|
(Bal.Fig.) |
(Bal.Fig.) |
(70,000 x Rs. 3) |
(30,000 x Rs. 3) |
(30,000 x Rs. 3) |
(2,10,000 |
||
|
- 90,000 - 90,000) |
|||||||
|
Total |
1,10,000 |
50,000 |
3,30,000 |
1,50,000 |
1,20,000 |
30,000 |
30,000 |
Hence, the correct option is 2.
Question : Y Ltd. invited applications for issuing 500, 12% debentures of Rs.100 each at a discount of 5%. These debentures were redeemable after three years at par. Applications for 600 debentures were received. Pro-rata allotment was made to all the applicants assuming that the whole amount was payable with application.
Question:- When excess application money is refunded, Bank Account will be credited by __________.
Option 1: Rs. 10,000
Option 2: Rs. 2,500
Option 3: Rs. 8,500
Option 4: Rs. 9,500
Correct Answer: Rs. 9,500
Solution : Answer = Rs. 9,500
Amount refunded (Rs. 100 X 95) = Rs. 9,500.
Hence, the correct option is 4.
Question : Y Ltd. invited applications for issuing 500, 12% debentures of Rs.100 each at a discount of 5%. These debentures were redeemable after three years at par. Applications for 600 debentures were received. Pro-rata allotment was made to all the applicants assuming that the whole amount was payable with application.
Question:- Discount on issue of debenture account will be _____.
Option 1: Debited by Rs. 3,000
Option 2: Debited by Rs. 2,500
Option 3: Credited by Rs. 2,500
Option 4: Credited by Rs. 3,000
Correct Answer: Debited by Rs. 2,500
Solution : Answer = Debited by Rs. 2,500
Debit discount on issue of Debentures with Rs.500 X 5= Rs. 2,500.
Hence, the correct option is 2.
Question : X Ltd. invited applications for 50,000 shares of Rs.10 each at 10% premium, payable on Rs.3 on application, Rs.3 on allotment and balance amount on first and final call Applications were received for 1,20,000 shares and shares were allotted on pro-rata basis The excess money received on application was to be adjusted against allotment only. A shareholder who applied for 6,000 shares, could not pay the call money and his shares were accordingly forfeited.
Question:- At the time of allotment of shares, share capital will be credited with _______.
Option 1: Rs. 3,60,000
Option 2: Rs. 1,50,000
Option 3: Rs. 2,10,000
Option 4: None of these
Correct Answer: Rs. 1,50,000
Solution : Answer = Rs. 1,50,000
The amount credited to the share capital account at the time of allotment = Rs.50,000 X 3 = Rs.1,50,000.
Question :
On 1st April, 2019, amita Ltd. issued 30,000 Equity Shares of Rs. 10 each at a premium of Rs. 4 per share, payable as follows:
Rs. 6 on application (including Rs. 1 premium),
Rs. 2 on allotment (including Rs. 1 premium),
Rs. 3 on first call (including Rs. 1 premium), and
Rs. 3 on second and final call (including Rs. 1 premium).
Applications were received for 45,000 shares, of which applications for 9,000 shares were rejected and their money was refunded. Rest of the applicants were issued shares on pro rata basis and their excess money was adjusted towards allotment.
Hari, to whom 600 shares were allotted, failed to pay the allotment money and his shares were forfeited after allotment. Mohan, who applied for 1,080 shares failed to pay the two calls and on his such failure, his shares were forfeited.
1,200 forfeited shares were reissued as fully paid-up on receipt of Rs. 9 per share, the whole of Mohan's shares being included.
Question:- Amount due but not paid by hari at the time of allotment will be:
Option 1: Rs. 720
Option 2: Rs. 1,200
Option 3: Rs. 480
Option 4: Nil
Correct Answer: Rs. 480
Solution :
Answer = Rs. 480
Excess amount received from Hari on application:
600 shares were allotted to Hari
Therefore, he must have applied for =36,000/ 30,000 x 600 = 720 shares
Excess application money received from Hari:
(720 shares - 600 shares) x Rs. 6 = 120 shares x Rs. 6 = Rs. 720.
|
Amount due but not paid by Hari on allotment: |
Rs. |
|
600 shares x Rs. 2 |
1,200 |
|
Less: Excess application money adjusted on allotment [ Rs. 600 as a part of Share Capital (600 x Rs. 1) and balance Rs. 120 as a |
720 |
|
part of Securities Premium] |
|
|
Amount due but not paid by Hari |
480 |
Hence, the correct option is 3.
Question :
X Ltd. invited applications for 50,000 shares of Rs.10 each at 10% premium, payable on Rs.3 on application, Rs.3 on allotment and balance amount on first and final call Applications were received for 1,20,000 shares and shares were allotted on pro-rata basis The excess money received on application was to be adjusted against allotment only. A shareholder who applied for 6,000 shares, could not pay the call money and his shares were accordingly forfeited.
Question:- Money Received on application is _____.
Option 1: Rs. 1,50,000
Option 2: Rs. 1,20,000
Option 3: Rs. 3,60,000
Option 4: Rs. 2,10,000
Correct Answer: Rs. 3,60,000
Solution : Answer = Rs. 3,60,000
Application money received = Rs.1,20,000 X 3 = Rs.3,60,000.
Question : On 1st April, 2019, amita Ltd. issued 30,000 Equity Shares of Rs. 10 each at a premium of Rs. 4 per share, payable as follows:
Rs. 6 on application (including Rs. 1 premium),
Rs. 2 on allotment (including Rs. 1 premium),
Rs. 3 on first call (including Rs. 1 premium), and
Rs. 3 on second and final call (including Rs. 1 premium).
Applications were received for 45,000 shares, of which applications for 9,000 shares were rejected and their money was refunded. Rest of the applicants were issued shares on pro rata basis and their excess money was adjusted towards allotment.
Hari, to whom 600 shares were allotted, failed to pay the allotment money and his shares were forfeited after allotment. Mohan, who applied for 1,080 shares failed to pay the two calls and on his such failure, his shares were forfeited.
1,200 forfeited shares were reissued as fully paid-up on receipt of Rs. 9 per share, the whole of Mohan's shares being included.
Question:- Amount received on allotment will be:
Option 1: Rs. 60,000
Option 2: Rs. 24,000
Option 3: Rs. 23,520
Option 4: Rs. 36,000
Correct Answer: Rs. 23,520
Solution : Answer = Rs. 23,520
|
Amount received on allotment: |
|
|
Total amount due on allotment (30,000 x Rs. 2) |
60,000 |
|
Less: Excess application money adjusted (6,000 x Rs. 6) |
36.000 24.000 |
|
Less: Amount due but not paid by Hari [WN 1 (b)] |
480 |
|
Net amount received on allotment |
23,520 |
