Question

Using information given in the following what is the net balance in Share Forfeiture Account.
Boyle Ltd. issued 40,000 shares of ₹10 each. Applications for 2,00,000 shares were received. Amount per share was payable as follows:

On application	₹4
On allotment	₹4
On first and final call	Balance

Shares were allotted on pro rata basis to all the applicants. Excess money received with applications was refunded after adjustment in allotment and first and final call.

Options

• ₹9,600

• ₹6,400

• ₹16,000

• ₹2,800

Answer 1

₹6,400

Explanation:

Applications & Excess

Applied = 2,00,000; Issued = 40,000 ⇒ Pro-rata to all.

Application received = 2,00,000 × ₹4 = ₹8,00,000

Application needed = 40,000 × ₹4 = ₹1,60,000

Excess application = ₹6,40,000

Set-off & Refund

Allotment due = 40,000 × ₹4 = ₹1,60,000

First & final call due = 40,000 × ₹2 = ₹80,000

Total set-off = ₹1,60,000 + ₹80,000 = ₹2,40,000

Refund = ₹6,40,000 − ₹2,40,000 = ₹4,00,000

Net balance in Share Forfeiture A/c

₹6,400.