Company accounts....!

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

Replies (3)
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

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

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

.
Alternatively, instead of Calls-in-arrear A/c you can also credit Allotment or Calls Account.

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