Company Accounts

Share Capital

Easy

High Light India Ltd. invited applications for 30,000 Shares of Rs. 100 each at a premium of Rs. 20 per share payable as follows:

On Application Rs. 40 (including Rs.10 premium)

On Allotment Rs. 30 (including Rs.10 premium)

On First Call Rs. 30

On Second and Final Call Rs. 20

Applications were received for 40,000 shares and pro-rata allotment was made on the application for 35,000 share. Excess application money was utilised towards allotment.

Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment.

Aman who applied for 1,050 shares failed to pay first call and his share were forfeited immediately after first Call.

Second and final call was made. All the money due on second call have been received.

Of the shares forfeited, 1,000 share were reissued as fully paid-up for Rs. 80 per share, which included the whole of Aman's shares.

Choose journal entries in the books of High Light India Ltd on receiving Application money :

Bank A/c Dr. 16,00000 To Share Application A/c 16,00000

Bank A/c Dr. 14,00000 To Share Application A/c 14,00000

Bank A/c Dr. 12,00000 To Share Application A/c 12,00000

Bank A/c Dr. 20,00000 To Share Application A/c 20,00000

✅ Correct Option: 1

When applications are received, the company collects application money from all applicants, regardless of how many will actually be allotted shares.

Applications were received for 40,000 shares.

Application money per share = Rs. 40

Total application money received = 40,000 shares × Rs. 40 = Rs. 16,00,000

Journal Entry:

Bank A/c Dr. 16,00,000

To Share Application A/c 16,00,000

(Being application money received on 40,000 shares @ Rs. 40 per share)

The crucial point here is that the company receives application money from 40,000 applicants at this stage, even though only 30,000 shares will ultimately be allotted. The adjustment for excess applications (through refund or adjustment towards allotment) happens at the time of allotment entry, not at the application stage.

Correct Option: 1

2025: 24 May Shift 1

The balance of the share forfeiture account is shown in the balance sheet under:

2025: 15 May Shift 1

What is the amount of Profit on reissue of Forfeited Shares Accounts transferred to capital reserve?

2023: 20 June Shift 2

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

2026: 31 May Shift 1

In the case of issue of shares, the amount on any call should not exceed .......... of the face value of shares.

2026: 31 May Shift 1

Applications Supported by Blocked Amount (ASBA) is a process developed by........................to apply for subscribing to IPOs and Rights Issue etc. of securities.

2026: 29 May Shift 1

Which of the following types of issue of shares is allowed to a company?

(A) Issue of shares of Face Value Rs. 10 at Rs. 11 by Initial Public Offer

(B) Issue of shares of Face Value Rs. 10 at Rs. 10 by Initial Public Offer

(D) Issue of shares of Face Value Rs. 10 at Rs. 9 to its employees

Choose the correct answer from the options given below:

Choose journal entries in the books of High Light India Ltd on receiving Application money :

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)