Multiple choice

The Directors of Chirag Ltd. resolved that 2,000 equity shares of Rs. 10 each, Rs.7 paid be forfeited for non-payment of final call of Rs. 3. 1,000 of these shares were re-issued for Rs. 6 per share. After recording of above entries, following information comes out:

  1. Rs. 14,000 charged to Forfeited Shares A/c at the time of forfeiture.

  2. Rs. 4,000 charged to Forfeited Shares A/c at the time of re-issue.

  3. Rs. 3,000 of Forfeited Shares A/c transferred to Capital Reserve A/c.

  4. Rs. 6,000 of Forfeited Shares A/c remains after re-issue & shown in the liability side of the Balance Sheet. Which of the above information is wrong?

  1. Only 1

  2. Only 2

  3. Only 3

  4. Only 4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Number of forfeited shares: 2,000 & Number of re-issued shares: 1,000. The number of forfeited shares remains after re-issue 1,000 (2,000 - 1,000) & the amount remains Rs. 7,000 (1000 x 7). Rs. 7,000 of Forfeited Shares A/c remains after re-issue and shown in the liability side of the Balance Sheet.

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