High Land India Ltd. invited applications for 50,000 Shares of ₹100 each per share. Applications were received for 70,000 shares and pro-rata allotment was made on the application for 50,000 shares. Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment. Of the shares forfeited, 500 share were reissued as fully paid-up for ₹80 per share.
Order to be followed for recording entries will be:
(A) Forfeiture of shares
(B) Calculation of amount received on allotment
(C) Adjustment of excess money received on application towards allotment
(D) Reissue of shares
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (C), (B), (A), (D)
Entries for an issue follow the life of the shares: money first comes in on application, it is settled against allotment, unpaid shares are then forfeited, and only forfeited shares can be reissued.
(C) Adjustment of excess money received on application towards allotment — applications came for 70,000 shares but only 50,000 were allotted pro rata, so the extra application money is first carried to allotment.
(B) Calculation of amount received on allotment — the cash still due on allotment can be worked out only after the excess application money has been set off, and Rohan’s unpaid share of it is then known.
(A) Forfeiture of shares — Rohan’s 600 shares are forfeited for non-payment of the allotment money, so this follows the allotment entries.
(D) Reissue of shares — 500 of the forfeited shares are reissued at ₹80; a share can be reissued only after it has been forfeited.
NCERT (2026-27 edition):
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