Sahil, a shareholder, failed to pay the second and final call of on shares issued to him at per share (face value of per share). His shares were forfeited after the final call deadlines passed. Which statement is correct regarding the Share Forfeiture Account?
- AShare Forfeiture A/c will be credited with
- BShare Forfeiture A/c will be debited with
- CShare Forfeiture A/c will be credited with
- DShare Forfeiture A/c will be debited with
Solution & Step-by-step Explanation
Let us break down the figures for this forfeiture:Determine the Called-Up Face Value:Since the shares were forfeited after the final call, the full face value was called up:
Determine the Unpaid Call Value:
Determine the Amount Received (excluding premium):The total face value is , and was not paid. This means per share was received toward the core face value.
The standard forfeiture entry is:
Thus, the Share Forfeiture Account is credited with .
Determine the Unpaid Call Value:
Determine the Amount Received (excluding premium):The total face value is , and was not paid. This means per share was received toward the core face value.
The standard forfeiture entry is:
Thus, the Share Forfeiture Account is credited with .