Rupa Ltd. forfeited 500 shares of 100 each fully called up on which 30,000 has been paid. 400 of these shares were reissued for 34,000. What is the net balance in a Share Forfeiture Account?
(A) Rs.6,000
(B) Rs.18,000
(C) Rs.24,000
(D) Rs.12,000
Answers
Answer:
Right answer is:(b)Rs.18,000
Journal Entries in the Books of Rupa Ltd.
Share Capital A/c Dr. (500 x 100) 50,000
To Calls in Arrears A/c (500 x 40) 20,000
To Share Forfeiture A/c (500 x 60) 30,000
(500 Shares Forfeited due to non-payment)
Bank A/c Dr. (400 x 85) 34,000
Share Forfeiture A/c Dr. (400 x 15) 6,000
To Share Capital A/c (400 x 10) 40,000
(400 Shares reissued at Rs. 85 per share)
Important Note: Now since 400 shares were reissued on which amount credited to Share forfeiture account would be 400 x 60 = 24,000 and the loss on the reissue of 400 shares is 6000, the amount to be credited to capital reserve would be 24,000 – 6,000 = 18,000
Share Forfeiture A/c Dr. (24000 – 6000) 18,000
To Capital Reserve A/c 18,000
(Being gain on forfeiture transferred to Capital Reserve A/c)
So the net balance in Share forfeiture A/c after transfer to Capital Reserve
= 30,000 - 6,000 - 18,000
= 6000 ,
Hence Option (A) 6,000 is the correct answer