Question : SK Ltd. invited applications for 3,20,000 equity shares of Rs. 10 each at a premium of Rs. 5 per share. The amount was payable as follows:
On application— Rs. 3 per share (including premium Rs. 1 per share),
On allotment— Rs. 5 per share (including premium Rs. 2 per share),
On first and final call—Balance.
Applications for 4,00,000 shares were received. Applications for 40,000 shares were rejected and application money refunded. Shares were allotted on pro rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Jeevan holding 800 shares failed to pay the allotment money and his shares were immediately forfeited. Afterwards, final call was made. Ganesh who had applied for 2,700 shares failed to pay the final call. His shares were also forfeited. Out of the forfeited shares, 1,500 shares were reissued at Rs. 8 per share fully paid-up. The reissued shares included all the forfeited shares of Jeevan
Question:- At the time of forfeiture of 800 shares forfeited shares account will be
Option 1: Credited with Rs. 1,900
Option 2: Debited with Rs. 1,900
Option 3: Credited with Rs. 3,700
Option 4: Debited with Rs. 1,600
Correct Answer: Credited with Rs. 1,900
Solution : Answer = Credited with Rs. 1,900
Share Capital A/c (800 X 5) Dr. 4,000
Securities Premium Reserve A/c (800 X 2) Dr. 1,600
To Share Forfeiture A/c (Bal. Figure) 1,900
To Calls-in-arrears A/c (Note) 3,700
Note:
Calculation of amount not received from Jeevan on Allotment:
Shares applied by Jeevan = 3,60,000/3,20,000 × 800 = 900 shares.
Application money received on shares applied (900 × Rs. 3) = 2,700
Less: Application money due on shares allotted (800 × Rs. 3) =
(2,400)
Excess Application money adjusted on allotment
300
Allotment money due on shares allotment = Rs.800 × Rs.5 = Rs.4,000
Less: Excess Application money adjusted on allotment =
Rs.300
Allotment money due but not received =
Rs.3,700
Hence, the correct option is 1.
