Answer questions on the basis of following case study.
Banjara Ltd. invited applications for 30,000 Shares of ₹100 each at a premium of ₹20 per share payable as follows:
On Application ₹40 (including ₹10 premium)
On Allotment ₹30 (including ₹10 premium)
On First Call ₹30
On Second and Final Call ₹20
Applications were received for 40,000 shares and pro-rata allotment was made on the application for 35,000 share. Excess application money was utilised towards allotment. Astha to whom 600 shares were allotted failed to pay the allotment money and her shares were forfeited immediately after allotment. Rekha who applied for 1,050 shares failed to pay first call and her 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 share were reissued as fully paid-up for ₹80 per share, which included the whole of Astha's shares.
Record the Journal Entry for Forfeiture of 900 shares of Rekha:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Share Capital A/c Dr. 72,000 To Share First Call A/c 27,000 To Share Forfeiture A/c 45,000
On forfeiture, Share Capital is debited with the amount called up on the forfeited shares, the unpaid call is credited to the call account, and the amount actually received is credited to Share Forfeiture.
Shares allotted to Rekha:
Pro-rata ratio = 30,000 : 35,000 = 6 : 7
Rekha’s shares = 1,050 × 30,000/35,000 = 900
Called up till the first call = ₹30 + ₹20 + ₹30 = ₹80 per share (premium excluded)
Share Capital debited = 900 × ₹80 = ₹72,000
First call unpaid = 900 × ₹30 = ₹27,000
Share Forfeiture (application and allotment received) = 900 × ₹50 = ₹45,000
The premium on her shares was received in full, so Securities Premium is not touched.
NCERT (2026-27 edition):
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