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CA Foundation · Accounting · Company Accounts

Iyer Ltd. issued 1,000 equity shares of ₹10 each at a premium of ₹3. A holder of 100 shares paid application ₹3 and allotment ₹5 (including premium), but did not pay the first and final call of ₹5. The shares were forfeited, and 60 of them were re-issued at ₹9 per share fully paid. What is the balance of Share Forfeiture Account to be transferred to Capital Reserve after the re-issue?

₹240 is transferred to Capital Reserve. Premium already received is reversed on forfeiture, so the forfeited amount is ₹5 per share. For the 60 re-issued shares this is ₹300, less the ₹60 discount on re-issue, leaving ₹240 as capital profit.

  1. A₹240Correct
  2. B₹180
  3. C₹60
  4. D₹320

Explanation

Allotment of ₹5 includes premium ₹3, so share capital received = 3 + 2 = ₹5 per share and premium received ₹3 is reversed on forfeiture. Forfeited amount credited = ₹5 x 100 = ₹500 (premium is debited, not credited). For 60 shares: 5 x 60 = ₹300. Discount on re-issue = (10 - 9) x 60 = ₹60. Gain = 300 - 60 = ₹240.

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