Question

Z Ltd. Issued 1,50,000 shares of Rs.100 each at a discount of 10%. Mr. Gopi to whom 300 shares were allotted, failed to pay the final call of Rs.30 per share and hence all the shares are forfeited. What amount is transferred to shares Forfeiture A/c ? a) Rs.9,000 b) Rs.21,000 c) Rs.18,000 d) Rs.27,000

Answer 1

When shares issued at par are forfeited the accounting treatment will be as follows: (i) Debit Share Capital Account with amount called up (whether received or not) per share up to the time of forfeiture.

Any forfeited shares held by the company do not entitle the company to vote or receive dividend payments. A Private Limited Company can hold the forfeited shares indefinitely while awaiting sale or re-allotment. However, a Public Limited Company can only hold forfeited shares for up to three years.