Ashoka Limited Company, which had issued equity shares of ₹20 each at a premium of ₹4 per share, forfeited 1,000 shares for non-payment of final call of ₹2 per share. 400 of the forfeited shares were reissued at ₹14 per share out of the remaining shares of 200 shares reissued at ₹20 per share. Balance of Share Forfeiture Account after reissue of shares will be:

₹7,200

The correct answer is option 3- ₹7,200.

Journal entry on forfeiture of shares is-
Share Capital A/c          Dr.       20,000 (1,000 x 20)
          To Shares Forfeiture A/c                  18,000 (1,000 x 18)
          To Share Final Call A/c                     2,000 (1,000 x 2)
(1,000 shares forfeited)

Journal entry on reissue of 200 shares is-
Bank A/c   Dr.               4,000 (200 x 20)
      To Share Capital A/c           4,000 (200 x 20)
(Reissue of 200 shares)

Journal entry on reissue of 400 shares is-
Bank A/c   Dr.               5,600 (400 x 14)
Share Forfeiture A/c      2,400 (400 x 6)
      To Share Capital A/c           8,000 (400 x 20)
(Reissue of 400 shares)

Amount in share forfeiture A/c for 1,000 shares = 18,000
Amount related to 600 shares in share forfeiture A/c =  18,000/1,000 x 600
                                                                             = 10,800

Balance in share forfeiture account will belong to now 400 shares only that will be-
18,000 - 10,800
= 7,200