Read the following case study and answer the question.
Surya Ltd issued 10,000 equity shares of ₹50 each at a premium of 10%. The company received application for 13,000 shares. The amount was payable as: on application 30%, on allotment 30% plus Premium, on 1st call 10% and Balance on final call. Allotment was made pro-rata for all applicants. Excess application money received is to be adjusted on allotment. Company received all money called except from Manan, an applicant, of 390 shares, Manan Paid only application money. His shares were forfeited and 70% of the forfeited shares were reissued as fully paid for ₹40 each.
What amount is received by company in securities Premium Reserve Account?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹48,500
Premium = 10% of ₹50 = ₹5 per share, called with the allotment money.
Premium due = 10,000 × ₹5 = ₹50,000
Less: premium on Manan’s 300 shares, whose allotment money was not received = 300 × ₹5 = ₹1,500
Premium received = ₹48,500
The forfeited shares were reissued at ₹40, below the face value of ₹50, so the reissue adds nothing to securities premium.