A Company's Share Capital Consists of 50 000 Ordinary Shares

question 7

Multiple Choice

A company's share capital consists of 50 000 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,call money was received on 45 000 shares.On 31 October,the shares on which calls were outstanding were forfeited.The company's constitution provided for any surplus on resale to be returned to the shareholders whose shares were forfeited.The entry to record the forfeiture of shares is:

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Definitions:

Direct Cost

Expenses that can be directly traced to producing specific goods or services, such as raw materials and direct labor.

Indirect Cost

Costs not directly traceable to a specific product or project, such as utilities or rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profits.

Direct Manufacturing Cost

Costs that are directly attributable to the production of a specific product, including direct materials and direct labor.