Question

Lexa Ltd. issued 50,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:
On application and allotment — ₹ 7 per share (including premium)
On first and final call — Balance
The issue was fully subscribed. All the money was duly received except the first and final call on 1,000 equity shares. These shares were forfeited. On forfeiture of these shares, Calls in Arrears Account will be:

• A. \( \text{Credited by ₹ 7,000} \)
• B. \( \text{Debited by ₹ 5,000} \)
• C. \( \text{Credited by ₹ 5,000} \)
• D. \( \text{Debited by ₹ 7,000} \)

Hint:

When shares are forfeited, the unpaid amount is credited to the Calls in Arrears Account to reflect the reversal of the dues.

Answer 1

The Correct Option is C

1. Amount Due on First and Final Call: Remaining balance = ₹ 12 (total) - ₹ 7 (application and allotment) = ₹ 5. 2. Forfeited Shares: Quantity of shares forfeited = 1,000. 3. Calculation of Unpaid Sum: Aggregate unpaid sum = \( 1,000 \times ₹ 5 = ₹ 5,000. \) 4. Accounting for Calls in Arrears: Upon share forfeiture, the outstanding sum is credited to the Calls in Arrears Account: \[ \text{Calls in Arrears Account Credited} = ₹ 5,000. \]