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Company account

Natasha (Star counter)     20 September 2012

Star counter 
 28 points

| My Other Post

I have meditated a lot of over the question but finally broke down after beating my head on the table for the last couple of days. Anyway here is my question: D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows: On application Rs.20 On allotment Rs.50 (including premium) On first call Rs.30 On second and final call Rs.20 Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application of 2,40,000 shares was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued. Net balance in Share Forfeiture Account = ________. (a) Rs. 1,00,000 (b) Rs. 3,00,000 (c) Rs. 96,000 (d) Rs. 3,96,000 Ans. (a) Rs. 100000 (No. of Shares Forfeited (-) No. of shares reissued) x Amount forfeited per share (10000 shares – 8000 shares) x Rs. 50* i.e. Rs. 100000 E did not pay the allotment money, thus the money on the share Forfeiture account should only include 4000*20 right as and not 4000*50. In this answer they seem to have included the allotment money. Could you please explain to me why this should be the case? It is very possible that i have not understood the question. Thanks for you time and help, Inder

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