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
Acquisition of firms is the same as:
(a) a merger
(b) an amalgamation
(c) a takeover
(d) an absorption
Select the correct code.
A concept given for diversified corporations which advocates (a) What businesses should a diversified corporation own and why; and (b) What organizational structure, management processes, and philosophy will foster superior performance from the corporation’s individual business units, is known as:
A letter of acceptance sufficiently stamped and duly addressed is put into the course of transmission. There is a _______.
An agent is personally liable to third parties in which of the following situations?
A. If an agent acts for an undisclosed Principal
B. Trade usage and customs make the agent personally liable
C. If an agent signs a contract in the Principal's name
D. If an agent acts for the named Principal
E. If an agent works for a foreign Principal.
Choose the correct answer from the options given below:
An approach to corporate strategy in which top management views its product lines and business units as a series of investments from which it expects a profitable return is called ________
