Question

600 shares of ₹10 each were issued at 20% premium. Final call of ₹3 not received on 100 shares. What is the forfeiture amount?

• A. ₹2000
• B. ₹1800
• C. ₹900
• D. ₹1000

Hint:

When shares are forfeited, the amount received is considered, and the difference is the forfeiture amount. Always remember to subtract the amount received from the total due.

Answer 1

The Correct Option is C

To determine the forfeiture amount for the shares in question, follow these steps:

• Calculate the Issue Price per Share:
  • Face value of each share = ₹10
  • Premium on each share = 20% of ₹10 = ₹2
  • Total issue price per share = ₹10 + ₹2 = ₹12
• Understand the Final Call Scenario:
  • Final call not received on 100 shares.
  • Final call amount per share = ₹3
  • Total final call amount not received = 100 shares × ₹3 = ₹300
• Forfeiture Amount Calculation:
  • Forfeiture is the amount of money received on the shares that are being forfeited excluding calls that were not received.
  • Total amount paid per forfeited share (excluding final call) = Total issue price - Final call = ₹12 - ₹3 = ₹9
  • Total forfeiture amount = 100 shares × ₹9 = ₹900

The correct answer is ₹900.