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Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Match the following regarding share.

LIST 1 LIST 2
1) Maximum amount of discount at which shares can be reissued a) Amount received
2) Minimum amount at which shares can be reissued b) Amount not received
3) Share capital is debited at the time of forfeiture c) Amount called

 

Options:

1) a, 2) b, 3) c

1) b, 2) c, 3) a

1) a, 2) c, 3) b

1) c, 2) a, 3) b

Correct Answer:

1) a, 2) b, 3) c

Explanation:
LIST 1 LIST 2
1) Maximum amount of discount at which shares can be reissued a) Amount received
2) Minimum amount at which shares can be reissued b) Amount not received
3) Share capital is debited at the time of forfeiture c) Amount called

 

Forfeiture of Shares issued at Par:
Share Capital A/c..........(Called up amount) Dr.
     To Share Forfeiture A/c...........(Paid up amount)
     To Share Allotment A/c (Amount not received)
     To Calls in arrears A/c (Amount not received)
(shares forfeited for non-payment of allotment money and calls made)

* Forfeited shares that are reissued can be offered as fully paid, either at their face value, a higher value, or a reduced value. It's important to highlight that the discount granted during reissuance must not surpass the initial amount received for the forfeited shares when they were first issued. Any discount given when reissuing forfeited shares should be recorded in the 'Forfeited Share Account'. If there's any remaining balance in the Share-Forfeited Account associated with the reissued shares, this surplus should be treated as a gain in capital and transferred to the Capital Reserve Account.

* Forfeited shares must be issued at the minimum price which is not received for which the forfeiture of shares is done.

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