Question

Lexa Ltd. issued 50,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:

On application and allotment - ₹ 7 per share (including premium)

On first and final call - Balance

The issue was fully subscribed. All the money was duly received except the first and final call on 1,000 equity shares. These shares were forfeited. On forfeiture of these shares, Calls in Arrears Account will be

Options

• credited by ₹ 7,000.

• debited by ₹ 5,000.

• credited by ₹ 5,000.

• debited by ₹ 7,000.

Answer 1

Credited by ₹ 5,000.

Explanation:

Issue price = ₹ 10 + ₹ 2 premium = ₹ 12. ₹ 7 per share was payable on application and allotment, so the balance call was ₹ 5 per share. For 1,000 shares:

1,000 × ₹ 5 = ₹ 5,000

On forfeiture, Calls in Arrears A/c is credited by ₹ 5,000.