If XYZ Co. Ltd. forfeited 10 shares of ₹10 each on which ₹7 called up, ₹5 paid on application,. What amount to be forfeited by the company?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹50.
Amount forfeited by the company is the paid up amount by the shareholders.
Paid up amount = 10 shares x Paid up application amount per share
= 10 x 5
= ₹50
Journal entry for the forfeiture of shares-
Share capital A/c Dr. ₹70
To share forfeiture A/c ₹50
To Share allotment A/c ₹20