A Ltd offered 50,000 shares of 10 each at a premium of 8 per share to the general public for subscription, payable as 5 on application (including premium 2), 6 on allotment (including premium 3), and 4 on first call (including premium 2) and the balance on second and final call. Issue was oversubscribed and all were allotted on pro-rata basis. One shareholder failed to pay anything after application and his/her shares were forfeited. Second call was not made. Company made following entry for forfeiture of defaulting shares. Share Capital A / C Dr 80,000 Securities Premium Reserve A / C Dr 40,000 To Share Forfeited A / C 60,000 To Calls in Arrears A / c 60,000 The share issue was oversubscribed by shares. (a) 50,000 (b) 40,000 (c) 10,000 (d) None of these
A Ltd offered 50,000 shares of 10 each at a premium of 8 per share to the general public for subscription, payable as 5 on application (including premium 2), 6 on allotment (including premium 3), and 4 on first call (including premium 2) and the balance on second and final call. Issue was oversubscribed and all were allotted on pro-rata basis. One shareholder failed to pay anything after application and his/her shares were forfeited. Second call was not made. Company made following entry for forfeiture of defaulting shares. Share Capital A / C Dr 80,000 Securities Premium Reserve A / C Dr 40,000 To Share Forfeited A / C 60,000 To Calls in Arrears A / c 60,000 The share issue was oversubscribed by shares. (a) 50,000 (b) 40,000 (c) 10,000 (d) None of these
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A Ltd offered 50,000 shares of 10 each at a premium of 8 per share to the general public for subscription, payable as 5 on application (including premium 2), 6 on allotment (including premium 3), and 4 on first call (including premium 2) and the balance on second and final call. Issue was oversubscribed and all were allotted on pro-rata basis. One shareholder failed to pay anything after application and his/her shares were forfeited. Second call was not made. Company made following entry for forfeiture of defaulting shares.
Share Capital A / C
Dr
80,000
Securities Premium Reserve A / C Dr
40,000
To Share Forfeited A / C
60,000
To Calls in Arrears A / c
60,000
The share issue was oversubscribed by
shares.
(a) 50,000
(b) 40,000
(c) 10,000
(d) None of these
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