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- There is no discount on reissue as the shares reissued at face value.
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)

Note: Discount per share on reissue of these 400 shares is Rs 6 per share (Reissued at Rs 14 /share). Total discount is Rs 2,400. 

Amount in share forfeiture A/c for 1,000 shares = 18,000
Amount related to 600 shares (which were reissued) in share forfeiture A/c =  Amount received per share (18,000/1,000) x 600
                                                                             = 10,800

Balance in share forfeiture account ( relating to 400 shares still not reissued) will be-
18,000 - 10,800
= 7,200

Note: Amount of discount pertaining to reisssue of 600 shares is 2,400 (Zero on 200 shares and 2,400 on 400 shares). After debiting this amount of Rs 2,400 to share forfeiture account, the remaining forfeiture amount for these 600 reissued shares (200+400) i.e. 10,800-2400 = 8400 will be transferred to Capital reserve.

Further, premium is not relevant as it was received before Forfeiture.