Question

A company has issued $10,000$ shares of $Rs.20$ each and amount has been demanded as under:
On application - $Rs.5$ On allotment - $Rs.7$
On $1st$ Call - $Rs.6$ On $2nd$ and Final Call - $Rs.2$
A shareholder holding $400$ shares paid only application money and his shares have been forfeited. On reissue of these shares @ $Rs.16$ per share, amount debited to shares forfeited account is _____________ .

• A. $Rs.2,000$
• B. $Rs.1,600$
• C. $Rs.6,000$
• D. $Rs.8,000$

Answer 1

Answer: (B)

$Rs.1,600$

On reissue of forfeited shares, amount of discount allowed on these shares is debited to share forfeited account. The shares are being issued @ $Rs.16$, therefore, discount allowed is @ $Rs.4$. Hence $(400\times 4)=Rs.1,600$ will be debited to share forfeited account and correct answer is (b).