Analyze the case given below and answer the questions.
Anil Technologies limited company issued 5,000, 9% Debentures of ₹100 each at a premium of ₹20 payable as follows:
1. ₹40 including premium of ₹10 on application
2. ₹40 including premium of ₹10 on allotment
3. Balance on first and final call
Applications were received for 5,000 debentures and allotment was made to all the applicants. All the calls were made and amounts received.
What amount of money that was received on application needs to be transferred to the securities premium reserve account?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹50,000.
Application money received included ₹10 premium. Therefore amount transferred to the securities premium reserve account = 5,000 X 10
= ₹50,000