31 July 2012
Hi frnds, I have some problem in following sums. please help me to solve the question. As answers are given but i am not able to solve this. please help me with proper steps.
1. A company issued 10000 shares of Rs. 10each. Total applications were for 12000 shares; allotment was made pro-rata. Application money was Rs. 2per share and allotment money Rs. 3per share. Rao failed to pay the allotment money on his 300 shares. How much is due from Rao for allotment? [ANS: Rs. 780] 2. S Ltd. had issued equity shares of Rs. 10, issued at premium of Rs. 2, for nonpayment of the final call of Rs. 3. Of these 100 shares were re-issued @ Rs. 11 per share. How much is transferred to capital reserve? [ANS: Rs. 700] 3. E Ltd had allotted 10000 shares to applicants for 14000 shares on pro rata basis. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium of Rs. 2 each), Rs. 3on first call and Rs. 2 on final call. Vazir failed to pay the first call and final call on his 300 shares. All the shares were forfeited and out of these 200 shares were reissued @ Rs. 9per share. What is the amount credited to capital Reserve? [ANS: Shares Forfeited A/c Rs. 370 (Cr)Capital Reserve A/c Rs. 1050 (Cr)]
MOney received for 100 shares in first issue is Rs 700 (100*7). ie Rs 3 which was the final call, was not receievd. This amount gets transferred to Share forfeiture account.
Siince the number of shares were reissued at atleast face value or higher (in given case, it is at Rs 11 ie more than Rs 10), the entire amount of share forfeiture account gets transferred to capital reserve.
Question 3: Here I Guess the solution seems to be incorect. You may please confirm.
If 300 are allotted then he must have applied for 420 shares (14,000:10,000).
The amount reced is 420 *2 = 840
Money to be received for 300 shares: On application 300*2 = 600 On Allotment 300*5 = 1500 Total 2100
Less : received (840)
Balance to be received 1260. (this is said to be received)
Now if something has to go to shareforfeiture account will be 300*5 (2+3) = 1500.
Now since the 200 shares were issued ata disount of Re 1, there is a loss of Rs 200 (200 shares*Re 1 discount). This loss gets debited to share forfeituire account. Thus the share forfeiture account balance will now stand at Rs 1300.
Since 200 shares were issued, the amount pertaining to those shares lying in share forfeiture account will have to be transfererd to Capital reserve. ie 200*(2+3) = 1000 Less discount of Rs 200 (200*1).
whihc is Rs 800, thus leaving a balance of Rs 500 in share foorfiture account.
Point to note: Amounts received on account of share premium are never reversed and hence they do not form part of either share forfeiture account or capital reserve.
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