Assertion (A): If 1,00,000 shares of ₹10 each of X Ltd. are fully called, Share Forfeiture amount of ₹6,000 on 1,000 forfeited shares will be added to Subscribed and Fully Paid Capital of ₹9,90,000. Reason (R): If 1,00,000 shares of ₹10 each are ₹7 Called, Share Forfeiture amount of ₹8,000 on 2,000 forfeited shares will be added to Subscribed but Not Fully Paid Capital of ₹6,86,000. In the context of the above two statements, which of the following is correct?

Question

KollegeApply · Accepted Answer

Both (A) and (R) are false. Explanation: Assertion (A): 1,00,000 shares of ₹10 each, fully called = ₹10 $\times$ 1,00,000 = ₹10,00,000 1,000 shares forfeited; amount forfeited = ₹6,000 Subscribed and fully paid capital = 99,000 $\times$ ₹10 = ₹9,90,000 True, and forfeiture amount is NOT added to capital, so ₹9,90,000 is correct. The assertion is true, but the reason is flawed. Reason (R): If shares are ₹7 called, subscribed capital = 98,000 $\times$ ₹7 = ₹6,86,000 2,000 shares forfeited; forfeiture = ₹8,000 Forfeiture is not added to subscribed capital Incorrect reason, Securities premium or forfeiture is not added to subscribed capital

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