IGCSE Accounting Paper-2: Specimen Questions with Answers 43 - 44 of 189

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Passage

Turbo & Co. forfeited 100 equity shares of £ 100 each held by Mr. Andy on 20th December 2011, for nonpayment of first call of £ 20 per share and final call of £ 30 per share. These shares were reissued to Mr. Candy on 31st December 2011, at a discount of £ 35 per share.

Question 43 (3 of 5 Based on Passage)

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Short Answer▾

How can Turbo & Co. reissue the forfeited shares?

Explanation

Reissue of share means the resale of shares and not the re-allotment of shares. The shares which have been forfeited for nonpayment of subsequent call money can be reissued. The reissue of shares can either be at par or premium or at a discount. However the discount should not exceed the amount available in the share forfeiture account.

Question 44 (4 of 5 Based on Passage)

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Short Answer▾

What would be the journal entries in the books of Turbo & Co. ?

Explanation

Journal Entries in the Books of Turbo & Co
DateParticularsLfDebit amountCredit amount
20.12. 2011Share capital A/c Dr10000
To 1st call in arrear A/c2000
To final call in arrear A/c3000
To share forfeiture A/c5000
(Being 100 shares of £ 100 each forfeited for nonpayment of first call of £ 20 and final call of £ 30 respectively)
31.12. 2011Bank A/c Dr6500
Share forfeiture A/c Dr3500
To share capital A/c10000
(Being forfeited shares reissued to Mr. Candy at a discount of £ 35 per share)
31.12. 2011Share forfeiture A/c Dr1500
To Capital reserve A/c1500
(Being balance in share forfeiture A/c transferred to Capital reserve A/c)

Capital reserve = £ 5000 - £ 3500 = £ 1500

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