Company Accounts

Share Capital

Easy

Eicher Ltd. issued 50,000 shares of Rs.10 each at a premium of Rs.5 per share payable as follows:

On application Rs.3 per share

On allotment Rs.5 (including Rs.3 Premium)

On First Call Rs.5 (including Rs.2 Premium)

On Final Call Balance amount

Application were received for 72,000 shares. Directors allotted 50,000 shares to the applicants applying for 65,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards sum due on allotment. All the money was duly received with the exception of first call from Rahul, who applied for 2,600 shares. Due to non payment of 1st call his share were forfeited immediately. Later on these share were re-issued at minimum issue price.

On the basis of following case study, answer the question.

Determine the amount to be transferred to Capital Reserve on reissue of Rahul's Shares

Rs.7,800

Rs.6,000

Rs.1,800

Nil

✅ Correct Option: 4

Forfeiture balance on Rahul's 2,000 shares = Rs.10,000 (Rs.5 per share). The maximum permissible discount on reissue is therefore Rs.5. Reissuing at the minimum issue price means Rs.5 per share, and the entire Rs.10,000 of forfeiture is used up as discount. Hence, amount transferred to Capital Reserve = Nil.

Question 46

Record journal entry for forfeiture of Rahul's shares.

Question 47

Identify the amount by which bank account would be debited/credited on refund of rejected applications

Question 49

Identify the ratio in which shares are issued on Pro-rata basis.

Question 50

Before forfeiture of Rahul's shares, who are required to issue notice in this regard.

Determine the amount to be transferred to Capital Reserve on reissue of Rahul's Shares

Solution

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