MCQ Questions for Class 12 Commerce Accountancy Accounting For Share Capital Quiz 9

The amount received as calls-in-advance is a _____of the company.

0%
Right
0%
Asset
0%
Debt
0%
Revenue

The premium on issue of shares must be credited to a separate account called ________________.

0%
Share Premium Account
0%
Securities Premium Account
0%
Discount on Issue of Shares
0%
Securities Profits Account

A company has perpetual succession which means ____________________.

0%
Its continued existence for an indefinite period unless its all members dies
0%
Its continued existence for an indefinite period unless its all members become insolvent
0%
Its continued existence for an indefinite period unless its all members become of unsound mind
0%
Its continued existence for an indefinite period unless it is wound up by law.

Free transferability of share is the characteristic of the company. It is possessed by __________________.

0%
All companies
0%
All private companies
0%
All public companies
0%
None of these

A member can not be held liable for the acts of the company even if he holds virtually the entire share capital. This is related to:

0%
An artificial person created by law
0%
Separate Legal Entity
0%
Perpetual Existence
0%
Common Seal

Select the correct answer from the possible choices given below:
A __________ is indivisible unit of share capital.

0%
Debenture
0%
Share
0%
Bond
0%
None of above.

Common Seal means the official signature of ________________.

0%
The Company
0%
The Directors
0%
The Members
0%
The Employees

A company has a separate legal entity from _____________.

0%
Its employees
0%
Its directors
0%
Its creditors
0%
Its members

A company is an association registered under _______________.

0%
The Co-operative Societies Act
0%
The Societies Registration Act
0%
The Indian Partnership Act
0%
The Companies Act

W Ltd. issued 2,00,000 shares of rs. 100 each at a premium of 20% on May 1,2015, payable as follows:
On application (inclusive of premium) Rs.45
On allotment Rs.25
On first & final call Rs.50
Sunil to whom 10,000 shares were allotted, has paid Rs.5,00,000 on June 1,At the time of remitting the allotment money, he indicated the excess that money should be adjusted towards the call money.The directors of the company made the first and the final call on October 31,The company has a policy of paying interest on calls-in-advance as per Table F of Schedule I to the Companies ActThe amount of interest paid to sunil on calls-in-Advance will be_______________-

0%
Rs. 25,000
0%
Rs. 12,500
0%
Rs. 20,833.33
0%
Rs. 18,750

A preference shares is one which carries _______________________.

0%
A right to receive dividend at a stipulated rate or of a fixed amount only before any dividend is paid on equity shares
0%
A right to receive repayment of capital only on winding up of the company before the capital of equity share holders is returned.
0%
Both rights mentioned in (a) and (b)
0%
None of these

X Ltd. was formed with a capital of Rs 10,00,000 divided into shares of Rs 10 each, It offered 90% shares called up 40% on application and 20% on allotment. The subscribers paid Rs 3,40,000 on application and Rs 1,69,000 on allotment. The subscribed capital is ___________.

0%
Rs 10,00,000
0%
Rs 5,10,000
0%
Rs 5,09,000
0%
Rs 3,40,000

Cumulative Preference Share is one on which __________________.

0%
Arrears of dividend accumulate
0%
Arrears of dividend do not accumulate
0%
Arrears of redeemable share capital accumulate
0%
None of these

Issued Capital refers to _______________.

0%
Paid up value of all shares allotted.
0%
Called up value of all shares allotted.
0%
Nominal value of all shares allotted.
0%
Nominal value of all shares offered to public

Subscribed Capital refers to __________________.

0%
Paid up value of all shares allotted.
0%
Called up value of all shares allotted.
0%
Nominal value of all shares allotted.
0%
Paid up value of all shares offered to public.

Reserve Capital refers to __________________.

0%
Capital reserve
0%
That portion of called up share capital which shall not be capable of being called up except in the event and for the purposes of the company being wound up.
0%
That portion of uncalled share capital which can be called up at any time before the company is being wound up.
0%
None of the above.

An authorized capital refers to __________________.

0%
Paid up value of all shares allotted
0%
Called up value of all shares allotted
0%
Nominal value of all shares offered to public.
0%
That amount which is stated in the capital clause of the Memorandum of Association as the Share Capital

Under the Capital Clause of the Memorandum of Association of the Company, it is must to state ________________________.

0%
The division of share capital into shares of fixed amount.
0%
The division of the authorized capital into different classes of shares.
0%
The rights of various classes of shareholders
0%
None of these

Equity Shares can be issued ___________________.

0%
With proportionate voting rights only
0%
With differential voting rights only
0%
With differential right as to dividend and voting
0%
None of these

Uncalled capital refers to ____________________.

0%
That portion of subscribed capital which has not yet been called up by the company
0%
That portion of unissued capital which has not yet been called up by the company.
0%
That portion of authorized capital which has not yet been issued.
0%
Reserve capital only.
0%
None of the above

The issue price of a share can be demanded ________________.

0%
only on application
0%
only on allotment
0%
only on call
0%
in lumpsum or installments on application & /or allotment &/or call

Participating Preference Shares is one which carries __________________.

0%
A right to receive arrears of dividend
0%
A rights to participate in the surplus profits and surplus assets
0%
A right to participate in the surplus profits or surplus assets or both
0%
A right to conversion into equity share

Securities Premium can be demanded ________________.

0%
only on application
0%
only on allotment
0%
only on call
0%
in lumpsum or installments on application &/or allotment &/or call

Convertible Preference share is one which carries _____________________.

0%
A right to receive arrears of dividend
0%
A rights to participate in the surplus profits and surplus assets
0%
A right to participate in the surplus profits or surplus assets or both
0%
A right of conversion into equity share

The balance of Securities Premium Account can be utilized _______________________.

0%
To issue fully paid bonus shares to creditors.
0%
To write off development expenditure.
0%
To provide for the premium payable on the buy-back of equity shares.
0%
None of the above

Unless otherwise stated, the preference shares are deemed to be _________________.

0%
Non-cumulative, Non-participating and Non-convertible.
0%
Cumulative, Non-participating and Convertible.
0%
Cumulative, Participating and Non-convertible
0%
None of the above

As per Sec. 69 (3) of the Companies Act, 1956, the amount payable on application on each share must be at least ______________________.

0%
5% of the nominal amount of share
0%
25% of the nominal amount of share
0%
25% of the called amount of share
0%
5% of the called amount of share.

Prospectus of a company is __________________.

0%
An application for shares/debentures
0%
An offer by the company to the public to sell its shares or debentures
0%
Cumulative, Participating and Non-convertible
0%
None of the above

As per Table A, the amount of call on a share must not exceed _____________________.

0%
5% of the nominal amount of share
0%
25% of the nominal amount of share
0%
25% of the called amount of share
0%
5% of the called amount of share

As per SEBI Guidelines, the amount payable on application on each share must be at least-

0%
5% of the nominal amount of share
0%
25% of the nominal amount of share
0%
25% of the called amount of share
0%
5% of the called amount of share

A company invited applications for 25,000 equity shares of Rs 10 each and received 30,000 applications along with the application money of Rs 4 per share. Which of the following alternatives can be followed?
I. Refund the excess applications.
II. Make pro rata allotment to all the applicants, and refund the excess application money.
III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.
IV. Not to allot any shares to some applicants and make pro rate allotment to other applicants.
V. Make pro rata allotment to all the applicants and adjust the excess money received towards call money.

0%
Only (II) above
0%
Both (I) and (IV) above
0%
All (I), (II), (Ill), (IV) and (V) above
0%
Only (III) above

If shares are forfeited, share capital account is debited with _________________.

0%
the face value of shares.
0%
the called up value of shares.
0%
the paid up value of shares.
0%
None of the above

On issue of shares, the application money must not be less than _____________.

0%
2.5% of the nominal value of shares
0%
2.5% of the issue price of shares
0%
5.0% of the nominal value of shares
0%
5.0% of the issue price of shares

Explanation

Nominal value is the value of a share decided by a company which remains the same throughout the working of that company.

The $SEBI$ has allotted a minimum of 5% of the nominal value for the amount to be charged as the share application money. This means that a company can demand minimum of 5% of the value when the shareholders apply for the issue of shares.

On approval from the Central Government, the rate of discount on issue of shares can be ________ percent of the nominal value of the shares.

0%
5
0%
10
0%
20
0%
None of three

How much is authorized share capital?

0%
Rs 2,00,00,000
0%
Rs 1,80,00,000
0%
Rs 1,70,00,000
0%
Rs 1,36,00,000

Explanation

Authorized share capital is the amount of capital which is registered with the company.

The CAS Ltd. has registered its capital as Rs

2, 00, 00, 000

$2,00,00,000$ and hence its authorized capital turns out to be Rs

2, 00, 00, 000

$2,00,00,000$ .

This can also be calculated as follows: No. of share* Face value of a share

Hence, authorised capital is =20,00,000 shares*Rs10 each =Rs20,00,000 authorised share capital.

If some shares are issued to a vendor who supplied a fixed asset, these shares are ____________________.

0%
not required to be disclosed.
0%
required to be disclosed separately under sub-head issued capital.
0%
required to be disclosed separately under sub-head authorised capital.
0%
None of these.

If shares are forfeited, Forfeited Shares Account is ___________________.

0%
debited with the amount received (excluding securities premium)
0%
debited with the called up amount on shares
0%
credited with the paid up amount on shares
0%
credited with the amount received (excluding securities premium)

Which of the following signifies the difference between par value and an issue price below par?

0%
Securities premium
0%
Discount on issue of shares
0%
Calls in arrear
0%
Calls in advance

As Per the Companies Act, only preference shares, which are redeemable within ____________.

0%
24 years
0%
22 years
0%
30 years
0%
20 years

How much is Called up Capital?

0%
Rs 2,00,00,000
0%
Rs 1,80,00,000
0%
Rs 1,70,00,000
0%
Rs 72,00,000

Explanation

Called up amount is the money which a company demands from its shareholders either on application, allotment or calls.

$Called\quad up\quad amount =No.\quad of\quad shares \times Called\quad up\quad value$

Substitute the values in above equation

$Called\quad up\quad amount\quad on\quad application=9,00,000\times 3 = Rs27,00,000$

$Called\quad up\quad amount\quad on\quad allotment$ = $9,00,000\times 3 = Rs 27,00,000$

$Called\quad up\quad amount\quad on\quad Ist\quad call =9,00,000\times 2 = Rs18,00,000$

$Total\quad called\quad up\quad amount = Rs 27,00,000 + Rs 27,00,000 + Rs 18,00,000 = Rs 72,00,000$

Hence, the total called up amount is Rs $72,00,000$ .

The directors of CAS Ltd. made the final call of Rs 30 per share on May 15 indicating the last date of payment of call money to be MayMr. X, holding 10,000 shares paid the call money on July 15.
If the company adopts Table A, the amount of interest on calls-in-arrear to be paid by
Mr. X is ____________.

0%
Rs 1,250
0%
Rs 1,875
0%
Rs 1,500
0%
Rs 2,250

Explanation

Interest on calls-in-arrears is the interest paid by the shareholder to a company when the money on calls or allotment has been paid after the due date.

According to Table A, the interest to be charged on calls-in-arrears is 5%

I n t e r e s t o n c a l l - i n - a r r e a r = A m o u n t o n a r r e a r \times i n t e r e s t r a t e \times t i m e p e r i o d

$Interest\quad on\quad call-in-arrear = Amount\quad on\quad arrear \times interest\quad rate \times time\quad period$

Substitute the values in above equation

I n t e r e s t o n c a l l - i n - a r r e a r = 3, 00, 000 \times \frac{5}{100} \times \frac{1.5}{12} m o n t h s = \frac{22, 50, 000}{1200} = R s 1, 875

$Interest\quad on\quad call-in-arrear = 3,00,000 \times \cfrac { 5 }{ 100 } \quad \times \cfrac { 1.5 }{ 12 } months = \cfrac { 22,50,000 }{ 1200 }= Rs\quad 1,875$

Hence the interest charged is Rs

1, 875

$1,875$ .

F Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium (to be paid at the time of allotment) on which first call of Rs 30 per share was not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 paid-up for Rs 90 per share, the Profit on re-issue is-

0%
Rs 2,500,
0%
Rs 2,300,
0%
Rs 1,500,
0%
Rs 1,000,

Explanation

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$

Substitute the values in the above equation

$Forfeiture\quad Amount=Rs20+ Rs30= Rs50$

Forfeiture amount is the money received by the company on forfeiture (cancellation of share) or on the reissue of share.

$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$

Substitute the values in the above equation

$Forfeiture\quad Amount=50 \times50= Rs2500$

$Forfeiture\quad Amount\quad for\quad 20\quad shares= 200\times 50= Rs1000$

$Forfeiture\quad Amount\quad for\quad reissued\quad shares=20\times 0= Rs0$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture- Forfeited\quad amount\quad on\quad reissue\\$

Substitute the values in the above equation

$Profit\quad on\quad reissue=Rs\quad 1000- Rs\quad 0= Rs 1000$

Hence, the profit earned on the reissue of shares is Rs $1000$ .

C Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 paid-up for Rs 70 per share, the Profit on re-issue is __________.

0%
Rs 1,500,
0%
Rs 1,300,
0%
Rs 900,
0%
Rs 400,

Explanation

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$Forfeiture\quad Amount=Application\quad Amount$

Substitute the values in above equation

$Forfeiture\quad Amount=Rs30$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$

Substitute the values in the above equation

$Forfeiture\quad Amount=50shares \times Rs30= Rs1,500$

$Forfeiture\quad Amount\quad for\quad 20share= 20shares \times Rs30= Rs600$

$Forfeiture\quad amount\quad on\quad reissue=20shares \times Rs10=200$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture-Forfeited\quad amount\quad on\quad reissue$

Substitute the values in the above equation

$Profit\quad on\quad reissue= Rs600-Rs200= Rs400$

Hence, the profit earned on the reissue of shares is Rs $400$ .

Share Forfeiture a/c Dr. Rs400

To capital reserve a/c Rs400.

The subscribed share capital of S ltd. is Rs 1,60,00,000 of Rs 100 each. There were no calls in arrear till the final call was made. The final call made was paid on 1,55,000 shares. The calls in arrear amounted to Rs 1,25,The final call on share = ?

0%
Rs 10
0%
Rs 15
0%
Rs 20
0%
Rs 25

Explanation

The shares subscribed by the public are

1, 60, 000

$1,60,000$ at Rs

100

$100$ each

The shares after the final call

1, 55, 000

$1,55,000$ .

S h a r e s f o r c a l l - i n - a r r e a r = S h a r e s s u b s c r i b e d - S h a r e s a f t e r f i n a l c a l l

$Shares\quad for\quad call-in-arrear= Shares\quad subscribed- Shares\quad after\quad final\quad call$

Substitute the values in above equation

S h a r e s f o r c a l l - i n - a r r e a r = 1, 60, 000 s h a r e s - 1, 55, 000 s h a r e s = 5, 000 s h a r e s

$Shares\quad for\quad call-in-arrear= 1,60,000\quad shares-1,55,000\quad shares= 5,000\quad shares\quad$

F i n a l C a l l p e r s h a r e = \frac{C a l l - i n - a r r e a r a m o u n t}{N o . o f s h a r e s}

$Final\quad Call\quad per\quad share\quad =\quad \cfrac { Call-in-arrear\quad amount }{ No.\quad of\quad shares } \quad \\ \quad$

Substitute the values in above equation

F i n a l C a l l p e r s h a r e = \frac{R s 1, 25, 000}{5, 000 s h a r e s} = R s 25

$Final\quad Call\quad per\quad share\quad =\quad \cfrac { Rs\quad 1,25,000 }{ 5,000\quad shares } =Rs\quad 25\quad \\ \quad$

X Ltd. had allotted 20,000 shares to the applicants of 28,000 shares on pro rata basis. The amount payable on application is RsMr. P applied for 840 shares. The number of shares allotted and the amount carded forward for adjustment 840 against allotment money due from Mr. P =?

0%
120 shares; Rs 240
0%
680 shares; Rs 320
0%
640 shares, Rs 400
0%
600 shares; Rs 480

Explanation

Pro- rata is a situation when amount on excess share is refunded,

S h a r e s A l l o t e d = \frac{T o t a l s h a r e s a l l o t e d}{T o t a l s h a r e s a p p l i e d} \times S h a r e a p p l i e d b y a s h a r e h o l d e r

$Shares\quad Alloted\quad =\quad \cfrac { Total\quad shares\quad alloted }{ Total\quad shares\quad applied } \quad \times \quad Share\quad applied\quad by\quad a\quad shareholder$

Substitute the values in above equation

S h a r e s A l l o t e d = \frac{2000 s h a r e s}{2800 s h a r e s} \times 840 s h a r e s = 600 s h a r e s

$Shares\quad Alloted\quad = \cfrac { 2000\quad shares }{ 2800\quad shares } \times 840\quad shares= 600\quad shares$

A d j u s t m e n t m o n e y = M o n e y o n A p p l i c a t i o n - M o n e y t o b e u s e d u p

$Adjustment\quad money= Money\quad on\quad Application - Money\quad to\quad be\quad used\quad up$

Substitute the values in above equation

A d j u s t m e n t m o n e y = R s 2 \times 840 s h a r e s - R s 2 \times 600 s h a r e s = R s 480

$Adjustment\quad money= Rs2 \times 840 shares - Rs 2 \times 600 shares= Rs\quad 480$ .

A Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 paid-up for Rs 90 per share, the Profit on re-issue is ____________.

0%
Rs 1,500,
0%
Rs 1,300,
0%
Rs 900,
0%
Rs 600,
0%
Rs 400,
0%
None of these

Explanation

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$Forfeiture\quad Amount=Application\quad Amount$

Substitute the values in above equation

$Forfeiture\quad Amount=Rs30$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$

Substitute the values in the above equation

$Forfeiture\quad Amount=50shares \times Rs30= Rs1,500$

$Forfeiture\quad Amount\quad for\quad 20shares=20shares \times Rs30=Rs600$ .

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$

Substitute the values in the above equation

$Profit\quad on\quad reissue=Rs600- Rs 0= Rs 600$

Hence, the profit earned on the reissue of shares is Rs $600$ .

CAS Ltd. issued 40,000 shares of Rs 10 each at a premium of 20% on May 01 payable as follows:
On application Rs 4.50 (inclusive of premium)
On allotment Rs 2.50
On first and final call Rs 5.00
Mr. X, to whom 2,000 shares were allotted, has paid Rs 10,000 on JuneAt the time of remitting the allotment money, she indicated that the excess money should be adjusted towards the call money. The directors of the company made the first and final call on OctoberThe company has a policy of paying interest on calls-in-advance. The amount of interest paid to Mr. X on calls-in-advance = ?

0%
Rs 125
0%
Rs 104
0%
Rs 250
0%
Rs 300

Explanation

Mr. X has paid Rs 10,000 as the allotment money on June 01.

M o n e y t o b e p a i d o n a l l o t m e n t = N o . o f s h a r e \times A l l o t m e n t m o n e y

$Money\quad to\quad be\quad paid\quad on\quad allotment= No.\quad of\quad share \times Allotment\quad money$

Substituting the values in the above equation

M o n e y t o b e p a i d o n a l l o t m e n t = 2000 s h a r e s \times R s 2.50 = R s 5, 000

$Money\quad to\quad be\quad paid\quad on\quad allotment= 2000\quad shares \times Rs\quad 2.50=Rs 5,000$

E x c e s s m o n e y o n a l l o t m e n t = A m o u n t R e c e i v e d - A m o u n t c a l l e d u p

$Excess\quad money\quad on\quad allotment= Amount\quad Received- Amount\quad called\quad up$

Substitute the values in above equation

E x c e s s m o n e y o n a l l o t m e n t = R s 10, 000 - R s 5, 000 = R s 5, 000

$Excess\quad money\quad on\quad allotment=Rs\quad 10,000- Rs\quad 5,000= Rs5,000$

I n t e r e s t p a i d o n c a l l - i n - a d v a n c e = E x c e s s m o n e y \times \frac{i n t e r e s t}{100} \times T i m e p e r i o d

$Interest\quad paid\quad on\quad call-in-advance= Excess\quad money\times \cfrac { interest }{ 100 } \times Time\quad period$

Substitute the values in the above equation

I n t e r e s t p a i d o n c a l l - i n - a d v a n c e = 5000 \times \frac{15}{100} \times \frac{6}{12} = R s 125

$Interest\quad paid\quad on\quad call-in-advance\quad =\quad 5000 \times \cfrac { 15 }{ 100 } \times \cfrac { 6 }{ 12 } = Rs 125$ .

X Ltd. forfeited 10 shares of Rs 10 each issued at a discount of 10% to Y on which a second & final call of Rs 4 was not yet called and a first call of Rs 4 was not received. 8 of these shares were reissued as Rs 8 called up for Rs 7.50 per share. On forfeiture the Share Capital will be ___________.

0%
Debited with Rs 48
0%
Credited with Rs 48
0%
Debited with Rs 60
0%
Credited with Rs 64

Explanation

When shares are forfeited the share capital account is debited.

S h a r e C a p i t a l A m o u n t = s h a r e s f o r f e i t e d \times c a l l e d u p v a l u e o f s h a r e c a p i t a l

$Share\quad Capital\quad Amount\quad =\quad shares\quad forfeited\quad \times \quad called\quad up\quad value\quad of\quad share\quad capital$

Substitute the values in above equation

S h a r e C a p i t a l A m o u n t = 10 s h a r e s \times R s 6 = R s 60

$Share\quad Capital\quad Amount=10shares \times Rs6= Rs60$ .

B Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 called up for Rs 80 per share, the Profit on re-issue is ____________.

0%
Rs 1,500,
0%
Rs 1,300,
0%
Rs 900,
0%
Rs 600,

Explanation

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$Forfeiture\quad Amount=Application\quad Amount$

Substitute the values in above equation

$Forfeiture\quad Amount=Rs30$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$

Substitute the values in the above equation

$Forfeiture\quad Amount=50shares\times Rs30= Rs1,500$

$Forfeiture\quad Amount\quad for\quad20shares=20shares\times Rs30=Rs600$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture-Forfeiture\quad amount\quad on\quad Reissue$

Substitute the values in the above equation

$Profit\quad on\quad reissue=Rs600- Rs0= Rs 600$

Hence, the profit earned on the reissue of shares is Rs $600$

Share forfeiture a/c Dr. Rs600

To caoital reserve a/c Rs600.

Y Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received and the second and final call of Rs 20 per share was not yet called. 20 of these shares were re-issued as Rs 80 paid up for Rs 70 per share.
On forfeiture, the Share Capital Account will be _____________.

0%
Debited with Rs 1,600
0%
Credited with Rs 1,600
0%
Debited with Rs 4,000
0%
Credited with Rs 1400

Explanation

The share capital is debited when writing the journal entry for forfeiture of shares.

S h a r e C a p i t a l A m o u n t = N o . o f s h a r e s f o r f e i t e d \times c a l l e d u p v a l u e

$Share\quad Capital\quad Amount\quad =\quad No.\quad of\quad shares\quad forfeited\quad \times \quad called\quad up\quad value$

Substitute the values in above equation

S h a r e C a p i t a l A m o u n t = 50 s h a r e s \times R s 80 = R s 4, 000

$Share\quad Capital\quad Amount= 50shares \times Rs80= Rs4,000$ .

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