High Land India Ltd. invited applications for 50,000 Shares of Rs. 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 shares were reissued as fully paid-up for Rs. 80 per share.The correct order to be followed for recording these 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 sharesChoose the correct answer from the options given below:
- A(A), (B), (C), (D)
- B(A), (B), (D), (C)
- C(C), (B), (A), (D)
- D(C), (B), (D), (A)
Solution & Step-by-step Explanation
Following the standard business process for accounting calls and forfeitures:First, any excess application money received from the public is adjusted toward allotment dues (C).Next, the company evaluates the net amount received on allotment after deducting default amounts (B).Because the shareholder defaulted on allotment, his shares are immediately cut off and forfeited (A).After forfeiture, the company chooses to reissue those forfeited shares to new investors (D).Therefore, the correct chronological sequence is (C), (B), (A), (D).