Comprehension Passage
High Light India Ltd. invited applications for 30,000 Shares of Rs. 100 each at a premium of Rs. 20 per share payable as follows:
- On Application: Rs. 40 (including Rs. 10 premium)
- On Allotment: Rs. 30 (including Rs. 10 premium)
- On First Call: Rs. 30
- On Second and Final Call: Rs. 20
Applications were received for 40,000 shares and pro-rata allotment was made on the application for 35,000 shares. Excess application money was utilised towards allotment.
- Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment.
- Aman who applied for 1,050 shares failed to pay the first call and his shares were forfeited immediately after the first call.
- Second and final call was made. All the money due on second call have been received.
Of the shares forfeited, 1,000 shares were reissued as fully paid-up for Rs. 80 per share, which included the whole of Aman’s shares.
After Rohan's shares were forfeited due to his failure to pay the allotment money, which of the following would be the treatment of the forfeited shares in the financial records?
1
The forfeited shares are cancelled and removed from the share capital account
2
The forfeited shares are reissued at their nominal value
3
The forfeited shares are reissued at a price lower than their nominal value
4
The forfeited shares are treated as a gain for the company