Question

A Company issued 50000 shares of 20 each at 5% premium.10 were payable on application and balance on the allotment. What will be the allotment amount?

Answer 1

When a shareholder doesn't pay up the called up value, his shares are forfeited and the amount is credited to forfeiture account at the time of forfeiture.

ForfeitureAmount=Applicationamount+Allotmentamount

Substitute values in the above equation

ForfeitureAmount=Rs2+Rs3=Rs5

ForfeitureAmounttobecredited=Sharesforfeited×Forfeitureamount

Substitute values in the above equation

ForfeitureAmounttobecredited=200shares×Rs5=Rs1,000.