Question : X applied for 2,000 shares of Rs. 10 each at a premium of Rs. 2.50 per share. He was allotted 1,000 shares. After having paid Rs. 3 per share on application, he did not pay the allotment money of Rs. 4.50 per share (including premium) and on his subsequent failure to pay the first call of Rs. 2 per share, his shares were forfeited. These shares were reissued @ Rs. 8 per share credited as fully paid-up.
The amount that will be transferred to capital reserve will be ______. Securities premium Reserve is debited by ______.
Option 1: Capital Reserve Rs. 3000, securities premium by Rs. 2500
Option 2: Capital reserve Rs. 3000, securities premium Rs. 1500
Option 3: Capital reserve Rs. Nil, securities premium by Rs. 1500
Option 4: None of the above
Correct Answer: Capital reserve Rs. 3000, securities premium Rs. 1500
Solution :
Answer = Capital reserve Rs. 3000, securities premium Rs. 1500
JOURNAL
Date
Particulars
L.F.
Dr. ( Rs.)
Cr. Rs.
Share Capital A/c
Securities Premium Reserve A/c
...Dr.
7,000
1,500
To Forfeited Shares A/c
To Shares Allotment A/c
To Shares First Call A/c
(1,000 shares forfeited for non-payment of allotment money and first call)
8,000
2,000
5,000
Bank A/c
Forfeited Shares A/c
To Share Capital A/c
(1,000 forfeited shares reissued as fully paid-up for Rs. 8 per share)
3,000
10,000
To Capital Reserve A/c
(Gain on reissue transferred to Capital Reserve)
Working Note:
Calculation of the amount due but not paid on allotment:
(a) Total No. of shares applied 2,000
(b) Total money paid on application (2,000 x Rs. 3) Rs. 6,000
(c) Excess application money [T 6,000 - (1,000 x Rs. 3)] Rs. 3,000
(d) Total amount due on allotment (1,000x Rs.4.50) Rs. 4,500*
(e) Amount due but not paid (T 4,500 - Rs. 3,000) Rs. 1,500
*Out of Rs. 4,500, Rs. 2,000 are for Share Capital and Rs. 2,500 are for Securities Premium Reserve. Out of excess application money of Rs. 3,000, Rs. 2,000 are adjusted towards allotment as Share Capital and Rs. 1,000 are adjusted towards allotment as Securities Premium Reserve. Therefore, Securities Premium Reserve of Rs. 1,500 (i.e., Rs. 2,500 - Rs. 1,000) is not received. Hence, Securities Premium Reserve is debited by Rs. 1,500. Hence, the correct option is 2.
Question : X applied for 2,000 shares of Rs. 10 each at a premium of Rs. 2.50 per share. He was allotted 1,000 shares. After having paid Rs. 3 per share on application, he did not pay the allotment money of Rs. 4.50 per share (including premium) and on his subsequent
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
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