What will be the correct sequence of events?
(i) Forfeiture of shares. (ii) Default on Calls.
(iii) Re-issue of shares. (iv) Amount transferred to capital reserve.
Options:
(A) (i), (iv), (ii), (iii)
(B) (ii), (iv), (i), (iii)
(C) (ii), (i), (iii), (iv)
(D) (iii), (iv), (i) (ii)
Answers & Comments
Verified answer
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The correct sequence of events in this context is:
(B) (ii), (iv), (i), (iii)
1. Default on Calls (ii)
2. Amount transferred to capital reserve (iv)
3. Forfeiture of shares (i)
4. Re-issue of shares (iii)
Answer:
C
Explanation:
firstly the unpaid amount on shares are called.
calls in arrears or default in calls is when the shareholders do not pay the call money.
when the due is not cleared, the company forfeits shares on which call money has not been recieved.
after some time company may re issue those shares either to same shareholder or a different one.
it may be issued in discount therefore the extra amount is transferred to capital reserves