High Light India Ltd. invited applications for 30,000 shares of ₹100 each at a premium of ₹ 20 per share payable as follows:

Applications were received for 40,000 shares and pro-rates allotment was made on the application for 35,000 share. Excess application money was utilised towards allotment.

Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment.

Aman who applied for 1,050 shares failed to pay first call and his shares were forfeited immediately after first call.

Second and final call was made. All the money due on second call have been received.

Of the shares forfeited 1,000 shares were reissued as fully paid-up for 80 per share, which include the whole of Aman's shares.

Answer the question on the basis of the information given.

At time of forfeiture of Rohan's shares, Forfeited Shares A/c will be credited by ____________.

₹22,000

The correct answer is option 2-  ₹22,000.

Allotted shares to Rohan = 600
Those who applied for 35,000 shares are allotted 30,000 shares.
Applied shares by Rohan = 35,000/30,000 x 600
                                     = 700

Excess money received on application  = 100 x 40
                                                        = 4,000

Money due on allotment = 600 x 30
                                   = ₹18,000
The excess money on application is adjusted towards allotment.

Balance sheet due on allotment = 18,000 - 4,000
                                              = ₹14,000

Amount received from Rohan = 700 x 40
                                           = 28,000
Securities premium needed = 600 x 10
                                        = ₹6,000
Amount forfeited will be = 28,000 - 6,000
                                    = ₹22,000
                               

Journal entry on forfeiture-

Share Capital A/c Dr.                      ₹30,000 ( Calledup amount- 600 x 50)
Securities Premium Reserve A/c Dr.  ₹6,000  (600 x 10)
      To Share Allotment A/c                             ₹14,000 (Amount not received on allotment)
      To Share Forfeiture A/c                             ₹22,000 (Amount received)
(Forfeiture of 600 shares of Rohan for non-payment of allotment money)

Thus amount forfeited is ₹22,000.

* Amount received on premium on application = 600 x 10
                                                                   = ₹6,000
This is not cancelled as it has already been transferred to premium account.