Read the following passage carefully and answer the questions.
X Ltd. issued 30,000 shares to the public having Face value ₹100 at 10% premium. Money is receivable as follows:
Application = ₹40 (including premium)
Allotment = ₹45
First and Final call = Remaining amount
The public applied for 50,000 shares. The company rejected application for 10,000 shares and made a pro rata allotment to the rest of the applicants. A shareholder applying for 400 shares, didn't pay the allotment and call money and his allotted shares were forfeited by the company. Later, the forfeited shares were reissued at ₹80 each as fully paid.
The amount of Security Premium Reserve shown under the sub-head "Reserves and Surplus" will be:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹3,00,000
The premium of ₹10 a share (10% of ₹100) is collected with the application money of ₹40. It is credited to Securities Premium Reserve on the shares allotted, and it stays there even if some shares are later forfeited, because it has already been received.
Shares allotted = 30,000
Premium = 30,000 × ₹10 = ₹3,00,000
The forfeited shares are reissued at ₹80, which is a discount of ₹20 on the face value, so the reissue adds nothing to the Securities Premium Reserve. Nor does the premium on the forfeited shares come off: forfeiture never cancels a premium that has been received.
NCERT (2026-27 edition):
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