Large Ltd. issued 25,000 equity shares of Rs.100 each at a premium of Rs.15 each payable as Rs.25 on application, Rs.40 on allotment and balance in the first call. The applications were received for 75,000 equity shares. The above is the case of ____________.

Forfeiture of shares

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Pro rata allotment

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Over-subscription

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Under-subscription

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Solution

The correct option is C Over-subscription
Over Subscription. A company issues shares to the general public for subscription. It receives the applications along with the application money so that it can allot the shares to the applicants. It may hardly happen that it receives the applications equal to the number of shares issued.

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Similar questions

Q. D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium) & rest on first & final call. Applications were received for 1,20,000 shares. Excess application money was refunded to applications. All monies due were received except the allotment and first & final call monies on 1,000 shares. These shares were forfeited and reissued at Rs 9 per share.
On forfeiture of shares, Share Forfeiture Account will be credited by_____.

Q. Sea Ltd. issued 16,000 equity shares of ₹ 50 each at a premium of ₹ 10 per share payable on application ₹ 15, on allotment ₹ 30 (including premium), and balance on the first and final call. Applications were received for 24,500 shares, and allotment was made on a pro rata basis. Bimal, to whom 3,200 shares were allotted, failed to pay the amount due on the allotment. All his shares were forfeited after the first call was made. The forfeited shares were reissued to Dhriti at par. Calculate the amount received on reissue of forfeited shares.

[0.88 marks]

Q. D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium) & rest on first & final call. Applications were received for 1,20,000 shares. Excess application money was refunded to applications. All monies due were received except the allotment and first & final call monies on 1,000 shares. These shares were forfeited and reissued at Rs 9 per share.
On reissue of forfeited shares, balance of share forfeiture account transferred to capital reserve account will be _____.

A company issued 4,000 equity shares of Rs. 10 each at par payable as under:

On application Rs. 3; on allotment Rs. 2; On first call Rs. 4 and on final call Rs. 1 per share.

Applications were received for 10,000 shares. The allotment was made pro-rata. How much amount will be received in cash on the allotment?

PRACTICAL PROBLEMS

(Forfeiture of shares issued at par)

Vijay Ltd. issued Rs 40,000 Equity shares of Rs 10 each payable as follows.

On Application	:	Rs 2	On Allotment	:	Rs 3
On First Call	:	Rs 3	On Second Call	:	Rs 2

The company received applications for Rs 50,000 equity shares. Allotment for shares was made on pro rata basis. Share allotment and calls were made and as also received except Raja holding Rs 1,000 shares failed to pay both the calls. His shares were forfeited after second call.

Record the above transactions in books of Vijay Ltd.

Note: Excess money received on share application 10,000 × Rs 2 = 20,000 will be diverted to share allotment A/c.

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