Question

On forfeiture of 500 shares for non-payment of call money, what amount will be credited to Shares Forfeiture Account?

• A. Rs. 2,500
• B. Rs. 3,500
• C. Rs. 4,500
• D. Rs. 1,500

Hint:

On forfeiture, the amount already received on those shares is transferred to Share Forfeiture A/c. The unpaid amount is simply cancelled (not transferred).

Answer 1

The Correct Option is A

Step 1: Calculate total application money received on forfeited shares.
Application money = Rs. 5 per share (including premium).
For 500 shares = \( 500 \times 5 = Rs. 2,500 \).

Step 2: Treatment of premium.
Premium portion of application money is not transferred to forfeiture; only actual capital portion is considered. However, here the application (including premium) was fully received and credited, so the amount forfeited equals the actual received on those shares.

Step 3: Call default and forfeiture.
Since the shareholder defaulted at the call stage, the money already paid (application + allotment) stays with the company and is credited to Share Forfeiture A/c. But in this case, the problem specifies only application money was paid, while call was unpaid. Hence, forfeiture amount = Rs. 2,500.

Final Answer: \[ \boxed{Rs. 2,500} \]