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CA Foundation · Accounting · Company Accounts

Sharma Ltd. forfeited 200 equity shares of ₹10 each, issued at par, for non-payment of the final call of ₹3 per share. The shareholder had paid all other amounts. What is the credit to Share Forfeiture Account on forfeiture?

The Share Forfeiture Account is credited with ₹1,400. The shareholder paid ₹7 per share on 200 shares, and since the shares were issued at par, the whole amount received is transferred to Share Forfeiture Account. The unpaid ₹600 call is simply written off.

  1. A₹600
  2. B₹1,400Correct
  3. C₹2,000
  4. D₹1,700

Explanation

Amount actually received = (10 - 3) x 200 = ₹1,400. This amount is credited to Share Forfeiture Account because the shares were issued at par. ₹600 is the unpaid call, which is only a debit adjustment to Calls-in-arrears, not the forfeited amount.

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