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X ltd forfeited 20 shares of 10 each 8 called up , on which John had paid application and allotment money of 5 per share ,of these 15 shares were reissued to Parker as fully paid up for 6 per share what is the balance in the share forfeiture account after the relevant amount has been transferred to capital reserve account ?
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X ltd forfeited 20 shares of 10 each 8 called up , on which John had p...
The company forfeited 20 shares@10 each, 8 called up. So share capital is debited with Rs. 160. 5 per share is paid by John on application and allotment, so share forfeiture account will be credited with Rs. 100(20*5). The remaining amount is not paid. So calls in arrears will be debited with Rs. 60(20*3).
15 are reissued at Rs. 6 per share. So share forfeiture will be debited with Rs. 30 (15*2) as 8 per share called up.
Now the balance in the share forfeiture account after relavent amount has been transferred to capital reserves will be Rs. 70(100-30).
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X ltd forfeited 20 shares of 10 each 8 called up , on which John had p...
Balance in Share Forfeiture Account


  • Forfeiture of Shares: X Ltd forfeited 20 shares of 10 each, 8 called up.

  • Payment Made: John had paid application and allotment money of 5 per share.

  • Reissue of Shares: 15 shares were reissued to Parker as fully paid up for 6 per share.

  • Balance in Share Forfeiture Account: After transferring the relevant amount to the capital reserve account, the balance in the share forfeiture account can be calculated as follows:



The amount paid by John for the forfeited shares is 5 per share. Therefore, the total amount paid by John is 5 x 20 = 100.

The amount received from the reissue of shares is 6 per share. Therefore, the total amount received from the reissue of shares is 6 x 15 = 90.

Hence, the balance in the share forfeiture account after transferring the relevant amount to the capital reserve account is 100 - 90 = 10.

Explanation:

When shares are forfeited, the company has the right to retain the amount already paid by the shareholder and forfeit the remaining amount. In this case, John had paid 5 per share, and the company forfeited 2 per share (10 - 8).

After forfeiting the shares, the company can reissue them to other shareholders or new applicants. In this case, Parker purchased the forfeited shares for 6 per share, which is more than the forfeited amount of 2 per share.

The company can transfer the balance in the share forfeiture account to the capital reserve account. This is because the amount forfeited and the amount received from the reissue of shares are not a part of the company's revenue. Therefore, they cannot be considered as income and should be transferred to the capital reserve account.
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X ltd forfeited 20 shares of 10 each 8 called up , on which John had paid application and allotment money of 5 per share ,of these 15 shares were reissued to Parker as fully paid up for 6 per share what is the balance in the share forfeiture account after the relevant amount has been transferred to capital reserve account ?
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X ltd forfeited 20 shares of 10 each 8 called up , on which John had paid application and allotment money of 5 per share ,of these 15 shares were reissued to Parker as fully paid up for 6 per share what is the balance in the share forfeiture account after the relevant amount has been transferred to capital reserve account ? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about X ltd forfeited 20 shares of 10 each 8 called up , on which John had paid application and allotment money of 5 per share ,of these 15 shares were reissued to Parker as fully paid up for 6 per share what is the balance in the share forfeiture account after the relevant amount has been transferred to capital reserve account ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X ltd forfeited 20 shares of 10 each 8 called up , on which John had paid application and allotment money of 5 per share ,of these 15 shares were reissued to Parker as fully paid up for 6 per share what is the balance in the share forfeiture account after the relevant amount has been transferred to capital reserve account ?.
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