Question

LK Ltd. was registered with an authorised capital of ₹ 15,00,000 divided into 1,50,000 equity shares of ₹ 10 each. The company offered to the public for subscription 1,45,000 equity shares. Applications were received for 1,40,000 equity shares, and shares were allotted to all the applicants. All money due was received, with the exception of the first and final call money of ₹ 1 per share on 4,000 shares allotted to Nupur. Her shares were forfeited. Answer the following questions:

1. The amount of ‘Calls in Arrears’ disclosed in ‘Notes to Accounts’ will be ______.
   1. ₹ 1,40,000
   2. ₹ 36,000
   3. ₹ 4,000
   4. Nil
2. The number of shares of LK Ltd. after forfeiture will be ______.
   1. ₹ 1,46,000
   2. ₹ 1,36,000
   3. ₹ 1,41,000
   4. ₹ 1,40,000
3. In the ‘Notes to Accounts’, the amount disclosed under ‘Share Forfeiture Account’ will be ______.
   1. ₹ 4,000
   2. ₹ 36,000
   3. ₹ 40,000
   4. Nil
4. In the ‘Notes to Accounts’, the amount disclosed under ‘Issued Capital’ will be ______.
   1. ₹ 14,00,000
   2. ₹ 14,50,000
   3. ₹ 15,00,000
   4. ₹ 13,60,000
5. Balance in ‘Share Forfeiture Account’ will be shown in ‘Notes to Accounts’ in the balance sheet of LK Ltd. under ______.
   1. Subscribed capital
   2. Will not be shown in ‘Notes to Accounts’
   3. Issued capital
   4. Authorised capital
6. The amount of ‘Share Capital’ disclosed in the balance sheet of LK Ltd. will be ______.
   1. ₹ 13,56,000
   2. ₹ 13,64,000
   3. ₹ 13,96,000
   4. ₹ 14,00,000

Answer 1

i. The amount of ‘Calls in Arrears’ disclosed in ‘Notes to Accounts’ will be nil.

Explanation:

Calls in arrears refer to the amount not received on called-up shares that have not been forfeited by the company. In the given case, the shares are forfeited; therefore, calls in arrears do not exist.

ii. The number of shares of LK Ltd. after forfeiture will be ₹ 1,36,000.

Explanation:

Shares applied for and allotted = 1,40,000 shares forfeited = 4,000.

Remaining Shares = 1,40,000 − 4,000

= ₹ 1,36,000

iii. In the ‘Notes to Accounts’, the amount disclosed under ‘Share Forfeiture Account’ will be ₹ 36,000.

Explanation:

Number of shares forfeited = 4,000

Amount paid by Nupur per share = ₹ 10 – ₹ 1

= ₹ 9

Total amount is Share Forfeiture Account = 4,000 × 9

= ₹ 36,000

iv. In the ‘Notes to Accounts’, the amount disclosed under ‘Issued Capital’ will be ₹ 14,50,000.

Explanation:

Issued capital is the portion of the authorised capital that a company offers to the public for subscription.

Number of shares offered = 1,45,000

Issued capital = 1,45,000 × 10

= ₹ 14,50,000

v. Balance in ‘Share Forfeiture Account’ will be shown in ‘Notes to Accounts’ in the balance sheet of LK Ltd. under subscribed capital.

Explanation:

The balance in the Share Forfeiture Account is transferred to the subscribed capital.

vi. The amount of ‘Share Capital’ disclosed in the balance sheet of LK Ltd. will be ₹ 13,96,000.

Explanation:

The share capital disclosed in the Balance Sheet is the subscribed capital.

Amount of share capital = 1,36,000 shares of 10 each + Balance in Share Forfeiture Account

= ₹ 13,60,000 + ₹ 36,000

= ₹ 13,96,000