Question

. A company Forfeited 2,000 shares of Rs10 each issued at 20 %premium to be paid at the time of allotment on which Rs 8 is called up. Company not received Rs 4 on allotment including premium and Rs2 on First call .What will be the amount credited to share forfeiture account
1 point
a) 10,000
b) 8,000
c) 6,000
d) 2,000
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Answer 1

Answer:

The company debits a certain amount to the share capital at the time of forfeiture of shares which is always the called up value. And the called up value is that amount which any company demands from its shareholders periodically every year.

The share capital is debited because the called up amount which the company was expecting from was shareholders has not been deposited and thus they have to reduce the capital balance by debiting share capital account.

Share capital amount can be calculated as under:

ShareCapitalAmount=Calledupvaluepershare×No.ofshares

Substitute values in the above equation

ShareCapitalAmount=Rs9×2000shares=Rs18,000

The amount debited to share capital is Rs18,000.