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Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money. On forfeiture, the share capital account will be _________.
  • a)
    Debited by Rs.2,000
  • b)
    Debited by Rs.1,600
  • c)
    Credited by Rs.1,600
  • d)
    Debited by Rs. 1,200
Correct answer is option 'B'. Can you explain this answer?
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Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per sha...
Here, 10,000 shares of Rs 10 each were issued and called up per share is Rs 8. A Ltd. sold 200 shares due to non-payment of first call at Rs 2 i.e. Rs 400. Allotment and application money was paid at Rs 6 per share i.e. Rs 1200. If there is forfeiture of shares, the share capital account will be debited by Rs 8*200 (Rs 8 is the called up value of shares) i.e. Rs 1600.
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Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per sha...
Forfeiture of Shares and Its Impact on Share Capital Account

The forfeiture of shares occurs when the shareholder fails to pay the call money due on the shares. In the given scenario, Z Ltd. forfeited 200 shares of Mr. A for non-payment of the 1st call money of Rs.2 per share. Let us understand the impact of this forfeiture on the share capital account.

Calculation of Forfeiture Amount

- The called-up value per share was Rs. 8, and the amount paid by Mr. A was Rs. 6 for application and allotment money. Therefore, the amount due on each forfeited share is Rs. 2 (Rs. 8 - Rs. 6).
- The total forfeiture amount is calculated as Rs. 2 x 200 shares = Rs. 400.

Impact on Share Capital Account

- The share capital account is credited with the amount received on the issue of shares. In this case, Z Ltd. received Rs. 10 x 10,000 shares = Rs. 1,00,000 on the issue of shares.
- The share capital account is debited with the forfeited amount. In this case, the forfeited amount is Rs. 400 x 10 shares = Rs. 1,600.
- Therefore, the share capital account will be debited by Rs. 1,600 (Option B).

Conclusion

Forfeiture of shares can impact the share capital account of a company. It is important for companies to maintain proper records and accounting practices to ensure accurate and timely recording of such transactions.
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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.20On allotment Rs.50 (including premium)On first call Rs.30On second and final call Rs.20Applications 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 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 Es forfeited shares being reissued.Q.Amount transferred to Share forfeiture account at the time of forfeiting Fs shares = _________.

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.20On allotment Rs.50 (including premium)On first call Rs.30On second and final call Rs.20Applications 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 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 Es forfeited shares being reissued.Q.Amount transferred to Share forfeiture account at the time of forfeiting Es shares = _________.

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.20On allotment Rs.50 (including premium)On first call Rs.30On second and final call Rs.20Applications 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 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 Es forfeited shares being reissued.Q.Net balance in Share Forfeiture Account = ________.

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Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money. On forfeiture, the share capital account will be _________.a)Debited by Rs.2,000b)Debited by Rs.1,600c)Credited by Rs.1,600d)Debited by Rs. 1,200Correct answer is option 'B'. Can you explain this answer?
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Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money. On forfeiture, the share capital account will be _________.a)Debited by Rs.2,000b)Debited by Rs.1,600c)Credited by Rs.1,600d)Debited by Rs. 1,200Correct answer is option 'B'. Can you explain this answer? 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 Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money. On forfeiture, the share capital account will be _________.a)Debited by Rs.2,000b)Debited by Rs.1,600c)Credited by Rs.1,600d)Debited by Rs. 1,200Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money. On forfeiture, the share capital account will be _________.a)Debited by Rs.2,000b)Debited by Rs.1,600c)Credited by Rs.1,600d)Debited by Rs. 1,200Correct answer is option 'B'. Can you explain this answer?.
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