Question

Vishnu Ltd. forfeited 20 shares of ₹10 each, ₹8 called up, on which John had paid application and allotment money of ₹5 per share, of these, 15 shares were reissued to Parker as fully paid up for ₹6 per share. What is the balance in the share Forfeiture Account after the relevant amount has been transferred to Capital Reserve Account?

Options

• ₹0

• ₹5

• ₹25

• ₹100

Answer 1

₹25

Explanation:

Forfeiture (20 shares): received ₹5 per share ⇒ Share Forfeiture credited = 20 × 5 = ₹100.

Reissue: 15 shares at ₹6 as fully paid (₹10) ⇒ discount per share ₹4 ⇒ total discount 15 × 4 = ₹60 (debited to Forfeiture).

Forfeiture related to reissued shares = 15 × 5 = ₹75 → transfer to Capital Reserve = ₹75 − ₹60 = ₹15.

Balance left in Share Forfeiture A/c = ₹100 − ₹60 − ₹15 = ₹25.