Forfeiture of Shares

Q. Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) Basak Ltd. forfeited 20 shares of ₹ 10 each, ₹ 7 called-up on which the shareholder had paid application and allotment money of ₹ 5 per share. Out of these, 15 shares were reissued to Naresh as ₹ 7 per share paid-up for ₹ 8 per share.
(ii) Y Ltd. forfeited 90 shares of ₹ 10 each, ₹ 8 called-up issued at a premium of ₹ 2 per share to R for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as ₹ 8 called-up for ₹ 10 per share.

Q. Show the forfeiture and reissue entries under each of the following cases:

(i) X Ltd. forfeited 300 shares of ₹ 10 each, ₹ 8 called-up held by Mr . A for non-payment of second call money of ₹ 3 per share. These shares were reissued to Mr. Z for ₹ 10 per share as fully paid-up.
(ii) Y Ltd. forfeited 400 shares of ₹ 10 each, fully called-up , held by Mr. B for non-payment of final call money of ₹ 4 per share . These shares were reissued to Mr. T at ₹ 12 per share as fully paid-up.
(iii) Z Ltd. forfeited 250 shares of ₹ 10 each, fully called-up held by Mr. C for non-payment of allotment @ ₹ 8 per share as fully paid-up to Mr.P.

Q.

The result of forfeiture of shares is :

1. None of these

2. Both cancellation of membership of the shareholder and reduction of issued share Capital of the company

3. Reduction of issued share Capital of the company

4. Cancellation of membership of the shareholder.

Q.

Cancellation of the membership of the shareholder in a company is known as ___

1. None of these

2. Reissue of shares

3. Buy back of shares

4. Forfeiture of shares

Q.

X, a shareholder, holding 100 shares of Rs 10 each has paid application money of Rs 2 per share and allotment money of Rs 3 per share, but has failed to pay the first call of Rs 2 per share and second call of Rs 3 per share. His shares were forfeited. What is amount paid up on these shares?

1. Rs 500

2. None of these

3. Rs 300

4. Rs 200

Q. Forfeiture of shares is the action taken by a company to the shares.

1. allot
2. reissue
3. apply
4. cancel

Q. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R).

Assertion (A) - If a shareholder fails to pay a share claim on one or more calls, the company may forfeit the shares after giving due notice.

Reason (R) - The shareholder is liable to the extent of the unpaid value of shares he/she has subscribed for.

[0.88 marks]

1. Both A and R are true, and R is the correct explanation of A.
2. Both A and R are true, but R is not the correct explanation of A.
3. A is true, but R is false.
4. A is false, but R is true.

Q. Reeti Ltd. issued 25, 000 shares of ₹10 each, payable as ₹2 on application, ₹3 on allotment, ₹2.5 on first call, and ₹2.5 on the second and final call. All the amounts were duly received, except for the second and final call on 1, 600 shares. These shares were forfeited. Out of these, 1, 200 shares were re-issued as fully paid-up in such a way that ₹4, 200 were transferred to the capital reserve.
Calculate the re-issue price per share.

[0.88 marks]

1. ₹6
2. ₹4
3. ₹10
4. ₹2.5

Q. Give the meaning of forfeiture of shares.

Q. A shareholder is deprived of his/her membership due to .

1. company's will
2. non-payment of call
3. company's winding up
4. not applying shares

Q.

Q.

Failure to pay call money results in ____________.

1. None of these

2. Forfeiture of shares

3. Reissue of shares

4. Calls in Advance

Q. When the bill is to be produced to notary public at the time of ___________.

1. Drawing the bill
2. Acceptance of the bill
3. Dishonour of the bill
4. Bills for collection

Q.

Amount called up =

1. None of these

2. No. of shares × Amount paid per share

3. No. of shares × called up per share

4. No. of shares × Amount called but not paid per share

Q. Shiril Ltd. had allotted 40, 000 shares to the applicants of ₹56, 000 shares on a pro rata basis. The amount payable on application is ₹2 per share. Mahira applied for 1, 680 shares. Calculate the number of shares allotted to Mahira:

[2 marks]

1. 1, 200 shares
2. 1, 680 shares
3. 2, 352 shares
4. 2, 000 shares

Q.

A shareholder is deprived of his/her membership due to ___

1. Company`s will

2. None of these

3. Non payment of calls

4. Winding up of company

Q. The term means taking away of property on breach of a condition.

1. forfeit
2. allotment
3. reissue
4. application

Q. An item of Rs.72 has been debited to a personal account as Rs.27, is an error of __________.

1. none of these
2. commission
3. omission
4. principle

Q. Solve.
X agreed to sell his property worth about 1, 00, 000 for 10, 000 only. Xs mother proved that X was a congenital idiot, incapable of understanding the transaction. Is this sale valid?

Q. Reeti Ltd. issued 25, 000 shares of ₹10 each, payable as ₹2 on application, ₹3 on allotment, ₹2.5 on first call, and ₹2.5 on the second and final call. All the amounts were duly received, except for the second and final call on 1, 600 shares. These shares were forfeited. Out of these, 1, 200 shares were re-issued as fully paid-up in such a way that ₹4, 200 were transferred to the capital reserve.
Calculate the amount of calls-in-arrears:

[0.88 marks]

1. ₹3, 200
2. ₹4, 000
3. ₹1, 600
4. ₹16, 000

Q. Any one who refused to fight the Bandanga had to _____ all his possessions.

1. Sacrifice
2. Earn
3. Sell off
4. Protect

Q.

What is the cost prize, if the marked prize is12% above above the cost prize ( where m.p. is 140).

Ans:-125