Question

D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium) & rest on first & final call. Applications were received for 1,20,000 shares. Excess application money was refunded to applications. All monies due were received except the allotment and first & final call monies on 1,000 shares. These shares were forfeited and reissued at Rs 9 per share.
On forfeiture of shares, Share Forfeiture Account will be credited by_____.

• A. Rs. 3,000
• B. Rs. 5,000
• C. Rs. 8,000
• D. Rs. 2,000

Answer 1

The correct option is D Rs. 2,000

Here, Rs 2 per share is payable on application, Rs 5 is payable on allotment which also includes the premium of Rs 2 per share and the rest is payable on first and final call. This means if the total on shares including the premium is Rs 12 per share, the amount payable on first and final call is Rs 5 and hence, the amount due on 1,00,000 shares is Rs 5,00,000. But the allotment and first & final call monies on 1,000 shares was not received and are called Call-in-arrears. In order to calculate the amount to be debited to share forfeiture account the folk Number of shares forfeited and Amount per share called up should be multiplied i.e. Rs 5*1,000 i.e Rs 5,000.