Question
A companys capital consists of 100 000 ordinary shares issued at $2 and paid to $1 per share. On 1 September, a first call of
A companys capital consists of 100 000 ordinary shares issued at $2 and paid to $1 per share.
On 1 September, a first call of 50c was made on the ordinary shares. By 30 September, the call money received amounted to $45 000. No further payments were received, and on 31 October, the shares on which calls were outstanding were forfeited. On 15 November, the forfeited shares were reissued as paid to $1.50 for a payment of $1 per share. The appropriate cash amount from the reissue was received on 19 November. Costs of reissue amounted to $2 500. The companys constitution provided for any surplus on resale, after satisfaction of unpaid calls, accrued interest and costs, to be returned to the shareholders whose shares were forfeited.
The entry to record the forfeiture of shares is:
a.
Share Capital Dr 15 000
First call - ordinary shares Cr 5 000
Forfeited shares Cr 10 000
b.
Share Capital Dr 20 000
First call - ordinary shares Cr 5 000
Forfeited shares Cr 15 000
c.
Share capital Dr 10 000
Forfeited Shares Cr 10 000
d.
Forfeited Shares Dr 10 000
Share capital Cr 10 000
e.
None of the above
Clear my choice
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