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
| Originally posted by : Aparna | ||
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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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Total amount already received on forfeited shares will be credited to share forfeited account.
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No. of forfeited shares = 500
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Issued at discount = Rs. (20 - 1) = Rs. 19 [Discount on shares = 20 X 5% = Rs. 1]
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Amount received up to the time of forfeiture
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= Issue price - Non payment of allotment and final call
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= Rs. (19-9-5) = Rs. 5
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Amount to be credited to share forfeited a/c = 500 Shares X Rs. 5 = Rs. 2,500
but wont the discount amt of Rs.500 be considered???
| Originally posted by : Aparna | ||
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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.
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Share Capital A/c ………......Dr. |
No. of shares x called-up value per share |
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To, Calls-in-arrear A/c |
Amount due but not paid |
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To, Forfeited Shares A/c |
Amount received |
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To, Discount on Issue of Shares A/c |
No. of shares x discount per share |
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Alternatively, instead of Calls-in-arrear A/c you can also credit Allotment or Calls Account.
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