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Company accounts....!

Aparna (Student CA IPC / IPCC) (74 Points)

11 December 2013

Please someone helpme out with this ques.... with explanation...

Tree limited forfeited 500 shares of Rs.20 each issued at 5% discount, for non payment of allotment and final call of Rs.9 and Rs.5 respectively. Amount credited to share forfeiture A/c will be

a) 3,500 b) 2,500 c) 3,000 d) 4,000

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3 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 12 December 2013

Originally posted by : Aparna
	Please someone helpme out with this ques.... with explanation... Tree limited forfeited 500 shares of Rs.20 each issued at 5% discount, for non payment of allotment and final call of Rs.9 and Rs.5 respectively. Amount credited to share forfeiture A/c will be a) 3,500 b) 2,500 c) 3,000 d) 4,000

Total amount already received on forfeited shares will be credited to share forfeited account.
.
No. of forfeited shares = 500
.
Issued at discount = Rs. (20 - 1) = Rs. 19 [Discount on shares = 20 X 5% = Rs. 1]
.
Amount received up to the time of forfeiture
.
= Issue price - Non payment of allotment and final call
.
= Rs. (19-9-5) = Rs. 5
.
Amount to be credited to share forfeited a/c = 500 Shares X Rs. 5 = Rs. 2,500

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Aparna (Student CA IPC / IPCC) (74 Points)
Replied 12 December 2013

but wont the discount amt of Rs.500 be considered???

Deepak Gupta (CA Student) (15922 Points)
Replied 12 December 2013

Originally posted by : Aparna
	but wont the discount amt of Rs.500 be considered???

When shares are issued at a discount, the discount account is debited. Therefore, at the time of forfeiture of such shares, discount account will be credited to cancel it.
.

Share Capital A/c ………......Dr.	No. of shares x called-up value per share
To, Calls-in-arrear A/c	Amount due but not paid
To, Forfeited Shares A/c	Amount received
To, Discount on Issue of Shares A/c	No. of shares x discount per share