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A company forfeited 3,000 shares of ₹10 each (which were issued at par) held by Kishore for non-payment of allotment money of ₹ 5 per share. The called up value per share was ₹ 8. On forfeiture, the amount debited to share capital
- a)₹ 30,000
- b)₹ 24,000
- c)₹ 5,000
- d)₹ 6,000
Correct answer is option 'B'. Can you explain this answer?
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A company forfeited 3,000 shares of 10 each (which were issued at par)...
Calculation of Amount Debited to Share Capital on Forfeiture
Given:
Number of shares forfeited = 3,000
Face value of each share = Rs.10
Amount of allotment money due per share = Rs.5
Called up value per share = Rs.8
Total amount of allotment money due = Rs.5 x 3,000 = Rs.15,000
Amount paid by Kishore = Rs.0 (as he failed to pay the allotment money)
Amount already paid by Kishore = Rs.10 x 3,000 = Rs.30,000 (as he held 3,000 shares)
Total amount called up on forfeited shares = Rs.8 x 3,000 = Rs.24,000
Amount debited to share capital on forfeiture = Amount already paid - Total amount called up
= Rs.30,000 - Rs.24,000
= Rs.6,000
Therefore, the correct option is B) Rs.24,000.
Explanation:
When a shareholder fails to pay the allotment money due on shares, the company has the right to forfeit those shares. Forfeiture means cancelling the shares and taking back the ownership from the shareholder. In this case, Kishore failed to pay the allotment money due on 3,000 shares of Rs.10 each. The allotment money due per share was Rs.5, so the total amount due was Rs.15,000. Since Kishore did not pay this amount, the company forfeited his shares.
On forfeiture, the shareholder loses all the rights on the shares, including the right to receive any future dividends or proceeds from the sale of those shares. The company can then sell those shares to recover the amount due from the shareholder.
In this case, the called up value per share was Rs.8, which means the company had already received Rs.8 per share from Kishore. Therefore, the total amount called up on the forfeited shares was Rs.8 x 3,000 = Rs.24,000. Since Kishore had already paid Rs.10 per share, the amount already paid by him was Rs.10 x 3,000 = Rs.30,000. Therefore, the amount debited to share capital on forfeiture was Rs.30,000 - Rs.24,000 = Rs.6,000.
Given:
Number of shares forfeited = 3,000
Face value of each share = Rs.10
Amount of allotment money due per share = Rs.5
Called up value per share = Rs.8
Total amount of allotment money due = Rs.5 x 3,000 = Rs.15,000
Amount paid by Kishore = Rs.0 (as he failed to pay the allotment money)
Amount already paid by Kishore = Rs.10 x 3,000 = Rs.30,000 (as he held 3,000 shares)
Total amount called up on forfeited shares = Rs.8 x 3,000 = Rs.24,000
Amount debited to share capital on forfeiture = Amount already paid - Total amount called up
= Rs.30,000 - Rs.24,000
= Rs.6,000
Therefore, the correct option is B) Rs.24,000.
Explanation:
When a shareholder fails to pay the allotment money due on shares, the company has the right to forfeit those shares. Forfeiture means cancelling the shares and taking back the ownership from the shareholder. In this case, Kishore failed to pay the allotment money due on 3,000 shares of Rs.10 each. The allotment money due per share was Rs.5, so the total amount due was Rs.15,000. Since Kishore did not pay this amount, the company forfeited his shares.
On forfeiture, the shareholder loses all the rights on the shares, including the right to receive any future dividends or proceeds from the sale of those shares. The company can then sell those shares to recover the amount due from the shareholder.
In this case, the called up value per share was Rs.8, which means the company had already received Rs.8 per share from Kishore. Therefore, the total amount called up on the forfeited shares was Rs.8 x 3,000 = Rs.24,000. Since Kishore had already paid Rs.10 per share, the amount already paid by him was Rs.10 x 3,000 = Rs.30,000. Therefore, the amount debited to share capital on forfeiture was Rs.30,000 - Rs.24,000 = Rs.6,000.
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Community Answer
A company forfeited 3,000 shares of 10 each (which were issued at par)...
Shares capital account debited by = 3,000 x 8 = ₹ 24,000
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A company forfeited 3,000 shares of 10 each (which were issued at par) held by Kishore for non-payment of allotment money of 5 per share. The called up value per share was 8. On forfeiture, the amount debited to share capitala) 30,000b) 24,000c) 5,000d) 6,000Correct answer is option 'B'. Can you explain this answer?
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