Read the following passage and answer the question.

EFG Ltd. invited applications for 10,000 shares of ₹100 each at a premium of 10 each which is payable as follows-
Application - ₹50
Allotment - ₹35 including premium
Call - ₹25
Applications for 15,000 shares is received by the company. The company rejected the applications for 2,500 shares and made pro-rata on the remaining applicants. Mr. A who is allotted 400 shares failed to pay the allotment and call money due to which company forfeited his shares and reissued at ₹105 per share.

What is the amount of securities premium that should be received by the company on the shares issued by it?

₹1,00,000

The correct answer is option 4- ₹1,00,000.

Shares = 10,000
Securities premium = ₹10 per share
Amount total due or must be received  = 10,000 x 10
                                                              = ₹1,00,000

Note: The non-payment by Mr. A resulted in calls in arrears and subsequent forfeiture of shares, but it does not affect the total securities premium due on the original issue of shares. In accounting, the phrase “should be received” means the amount that became due from shareholders as per the terms of issue at the time of allotment. Since the company issued 10,000 shares at a premium of Rs 10 per share, the total securities premium due on the original issue amounts to Rs 1,00,000. The later default by Mr. A is accounted for separately through Calls in Arrears and Share Forfeiture accounts. Similarly, the premium received on reissue of forfeited shares is a separate transaction and is not considered while calculating the securities premium on the shares originally issued by the company.