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At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.
I. A debit to Share capital account with the called-up value of shares forfeited
I. A debit to Share capital account with the called-up value of shares forfeited
II. A credit to Share forfeiture account with the amount received on forfeited shares
III. A credit to Discount on issue of shares with the amount of discount allowed on forfeited shares
IV. A credit to Calls-in-arrears with the amount due but not paid on forfeited shares
- a)Both (I) and (IV) above
- b)Both (IV) and (III above
- c)Both (I) and (II) above
- d)(I), (II), (III) and (IV) above.
Correct answer is option 'D'. Can you explain this answer?
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At the time of forfeiture of shares which were originally issued at a ...
Answer:
At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves several components. Let's break down each component and explain its relevance.
I. A debit to Share capital account with the called-up value of shares forfeited:
- When shares are forfeited, the company cancels the shares and the shareholder loses the rights associated with those shares.
- The called-up value refers to the amount that the shareholder was required to pay on the shares when they were issued.
- Therefore, a debit is made to the Share capital account to reduce the share capital by the called-up value of the forfeited shares.
II. A credit to Share forfeiture account with the amount received on forfeited shares:
- The amount received on forfeited shares refers to the initial payment made by the shareholder for the shares.
- When shares are forfeited, the company may decide to sell them to recover the outstanding amount.
- The amount received from the sale of forfeited shares is credited to the Share forfeiture account to reflect the recovery of funds.
III. A credit to Discount on issue of shares with the amount of discount allowed on forfeited shares:
- When shares are originally issued at a discount, it means that the shares are sold at a lower price than their nominal or face value.
- The discount allowed on the forfeited shares refers to the difference between the nominal value and the discounted issue price.
- Since the shares are forfeited, the company no longer needs to account for the discount allowed, so a credit is made to the Discount on issue of shares account.
IV. A credit to Calls-in-arrears with the amount due but not paid on forfeited shares:
- Calls-in-arrears refers to the amount that shareholders have not paid on their shares, often due to non-payment of subsequent installments.
- When shares are forfeited, the company cancels the shares and the shareholders are relieved of any future payment obligations.
- However, the amount due but not paid on the forfeited shares is still considered as calls-in-arrears and is credited to the Calls-in-arrears account.
Summary:
- Therefore, the accounting entry at the time of forfeiture of shares issued at a discount involves a debit to Share capital, a credit to Share forfeiture, a credit to Discount on issue of shares, and a credit to Calls-in-arrears.
- All of these components are necessary to accurately reflect the cancellation of shares, recovery of funds, adjustment for the discount allowed, and recognition of calls-in-arrears.
At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves several components. Let's break down each component and explain its relevance.
I. A debit to Share capital account with the called-up value of shares forfeited:
- When shares are forfeited, the company cancels the shares and the shareholder loses the rights associated with those shares.
- The called-up value refers to the amount that the shareholder was required to pay on the shares when they were issued.
- Therefore, a debit is made to the Share capital account to reduce the share capital by the called-up value of the forfeited shares.
II. A credit to Share forfeiture account with the amount received on forfeited shares:
- The amount received on forfeited shares refers to the initial payment made by the shareholder for the shares.
- When shares are forfeited, the company may decide to sell them to recover the outstanding amount.
- The amount received from the sale of forfeited shares is credited to the Share forfeiture account to reflect the recovery of funds.
III. A credit to Discount on issue of shares with the amount of discount allowed on forfeited shares:
- When shares are originally issued at a discount, it means that the shares are sold at a lower price than their nominal or face value.
- The discount allowed on the forfeited shares refers to the difference between the nominal value and the discounted issue price.
- Since the shares are forfeited, the company no longer needs to account for the discount allowed, so a credit is made to the Discount on issue of shares account.
IV. A credit to Calls-in-arrears with the amount due but not paid on forfeited shares:
- Calls-in-arrears refers to the amount that shareholders have not paid on their shares, often due to non-payment of subsequent installments.
- When shares are forfeited, the company cancels the shares and the shareholders are relieved of any future payment obligations.
- However, the amount due but not paid on the forfeited shares is still considered as calls-in-arrears and is credited to the Calls-in-arrears account.
Summary:
- Therefore, the accounting entry at the time of forfeiture of shares issued at a discount involves a debit to Share capital, a credit to Share forfeiture, a credit to Discount on issue of shares, and a credit to Calls-in-arrears.
- All of these components are necessary to accurately reflect the cancellation of shares, recovery of funds, adjustment for the discount allowed, and recognition of calls-in-arrears.
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At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer?
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At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer?.
At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer?.
Solutions for At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Here you can find the meaning of At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice At the time of forfeiture of shares which were originally issued at a discount, the accounting entry involves __________.I. A debit to Share capital account with the called-up value of shares forfeitedII. A credit to Share forfeiture account with the amount received on forfeited sharesIII. A credit to Discount on issue of shares with the amount of discount allowed on forfeited sharesIV. A credit to Calls-in-arrears with the amount due but not paid on forfeited sharesa)Both (I) and (IV) aboveb)Both (IV) and (III abovec)Both (I) and (II) aboved)(I), (II), (III) and (IV) above.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice Commerce tests.
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