Question

Rajesh Ltd. forfeited 300 equity shares of ₹100 each, ₹70 called up for the non-payment of first call of ₹20 per share. Out of these shares, 100 shares were reissued @ ₹100 per share, ₹70 paid up. How much balance will remain in the share forfeiture account after reissue of 100 shares?

• A. ₹10,000
• B. ₹3,000
• C. ₹21,000
• D. ₹5,000

Hint:

When shares are reissued at the same price and paid-up value, no part of the forfeiture amount is used. It remains in the account.

Answer 1

The Correct Option is D

300 shares forfeited
Called-up amount per share = ₹70
Unpaid amount = ₹20
Paid amount = ₹50

Share Forfeiture Account on forfeiture = 300 × ₹50 = ₹15,000

Reissued 100 shares at ₹70
Since ₹70 is paid up and reissued at par, no extra discount is allowed,
Hence, amount from forfeiture account used for reissue = Nil
Balance of forfeiture account remains unaffected for these 100 shares.

Forfeiture balance related to these 100 shares = 100 × ₹50 = ₹5,000

Therefore, balance remaining in forfeiture account = ₹5,000