A company forfeited 400 equity shares of Rs. 10 each issued at a discount of 10 percent for non-payment of two calls of Rs. 2 each. What will be the amount forfeited by the company?
Rs.2,000
Calculating Amount Forfeited on Equity Shares
When a company forfeits shares, it cancels the shares issued to a shareholder due to non-payment of calls made. The amount forfeited by the company is typically the amount already paid by the shareholder on those shares. In this specific case, the shares were issued at a discount.
Understanding the Share Details
- Number of shares forfeited: 400 shares
- Face value per share: Rs. 10
- Issue terms: Issued at a discount of 10 percent
- Discount per share: 10% of Rs. 10 = $\text{Rs. } 1$
- Issue price per share: Face Value - Discount = Rs. 10 - Rs. 1 = $\text{Rs. } 9$
Identifying Unpaid Calls
The shareholder failed to pay two calls of Rs. 2 each.
- First call unpaid: Rs. 2 per share
- Second call unpaid: Rs. 2 per share
- Total amount unpaid per share: Rs. 2 + Rs. 2 = $\text{Rs. } 4$
Calculating Amount Paid Per Share
The amount paid by the shareholder per share is the difference between the issue price and the amount unpaid.
- Amount paid per share = Issue Price - Total Amount Unpaid
- Amount paid per share = Rs. 9 - Rs. 4 = $\text{Rs. } 5$
This amount of Rs. 5 per share represents the application and allotment money received by the company before the forfeiture occurred.
Calculating Total Amount Forfeited
The total amount forfeited by the company is the amount paid per share multiplied by the number of shares forfeited.
- Total amount forfeited = Amount paid per share $\times$ Number of shares forfeited
- Total amount forfeited = Rs. 5 $\times$ 400 shares = $\text{Rs. } 2,000$
Therefore, the company will forfeit a total amount of Rs. 2,000.
Important Questions from Corporate Accounting
In order to compensate the investors, what kind of debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures?
If the value of debentures is less than the value of the net asset taken over, then the difference will be credited to:
The part of capital which is called-up only on winding up is called ______.
From which of the following, companies cannot buy its own shares?
In order to compensate the investors, what kind of debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures?
