Shubham, a share holder, failed to pay the money for second and final call of Rs. 20 on 1,000 shares issued to him at Rs. 120 (face value of Rs. 100 per share). His shares were forfeited after the second and final call. What will be the journal entry for forefeiture of shares in this case?

Share Capital A/c Dr. 1,00,000
To Share second and Final Call A/c 20,000
To Share Forfeiture A/c 80,000

Correct answer: Option (3) → Share Capital A/c Dr. 1,00,000; To Share second and Final Call A/c 20,000; To Share Forfeiture A/c 80,000

Concept: Forfeiture of shares issued at a premium where the premium has already been received, per Accounting for Share Capital.

1,000 shares, face value Rs. 100, with the second & final call of Rs. 20 unpaid.
Share Capital A/c is debited with the called-up face value = 1,000 × 100 = Rs. 1,00,000.
Share Second & Final Call A/c is credited with the amount unpaid = 1,000 × 20 = Rs. 20,000.
Share Forfeiture A/c is credited with the amount actually received on capital = 1,000 × 80 = Rs. 80,000.
The premium, already received, is NOT reversed. Hence Option (3).