R.Ltd invited applications for 15,000 shares of ₹10 each at premium of ₹2 per share. The amount was payable as follows:
On Application ₹4
On allotment ₹5
On 1st call ₹2
On final call ₹1
Applications were received for 20,000 shares. The application of 2,000 shares was rejected. Mohan, who applied for 3,000 shares was allotted in full and prorata allotment was made to the remaining applicants. All money was fully received with the exception of the first call and final call on 3,000 shares held by Hari. These shares were forfeited and subsequently re-issued @ ₹8 per share.
On the basis of the above information answer the question.
Record the journal entry for forfeiture of shares.
Answer & explanation
Correct answer: option 3
The correct answer is option 3-
Share Capital A/c Dr ₹30,000
To Share Ist call A/c ₹6,000
To Share final call A/c ₹3,000
To Share forfeiture A/c ₹21,000
Hari did not pay first and final call on 3,000 shares. He paid allotment money on which securities premium is paid so there is no use of securities premium reserve.
So entry for forfeiture is-
Share Capital A/c Dr. ₹30,000 (3,000 x 10) Called up amount
To Share First Call A/c ₹6,000 (3,000 x 2) Amount not received
To Share Final Call A/c ₹3,000 (3,000 x 1) Amount not received
To Share Forfeiture A/c ₹21,000 (3,000 x 7) Amount received