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Moonrise Co. authorised with Share Capital of Rs.5,00,000 issued 10,000 equity shares of Rs.12 each.

Money was payable as

Rs.4 on Application

Rs.4 on Allotment (including premium)

Rs.4 on 1st and final call.

Applications were received for 12,000 shares and the directors decided to make pro-rata allotment. Mr. Rashidi an applicant for 120 shares, could not pay allotment and call money and Mr. Shantanu a holder of 200 shares failed to pay the call. All these shares were forfeited. Out of these forfeited shares, 150 shares (whole of Rashidi) were issued at Rs.8 per share answer following questions on the basis of above, answer from question.

Amount of Securities Premium Reserve to be debited at the time of forfeiture of shares will be

Solution

✅ Correct Option: 2

Securities Premium is debited at forfeiture only when the premium was NOT received. Rashidi applied for 120 shares, allotted 100 shares (pro-rata 6:5), and did not pay allotment, hence premium was NOT received on his 100 shares. Shantanu paid allotment (including premium). Premium to be debited = 100 x Rs.2 = Rs.200.

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