Sunena, a shareholder holding 500 shares of ₹10 each, did not pay the allotment money of ₹4 per share (including a premium of ₹2) and the first and final call of ₹3. Her shares were forfeited after the first and final call. Choose the correct journal entry for forfeiture of the shares.
Answer & explanation
Correct answer: option 4
The correct answer is option 4-
Share Capital A/c Dr. 5,000
Securities Premium A/c Dr. 1,000
To Share Allotment A/c 2,000
To Share first and final Call A/c 1,500
To Share Forfeiture A/c 2,500
500 shares of ₹10 each,
Not pay the allotment money of ₹4 per share (including a premium of ₹2) and the first and final call of ₹3.
Called up amount = 500 shares x 10
= 5,000
Securities premium = 500 shares x 2
= 1,000
Share allotment amount = 500 shares x 4
= 2,000
Share first and final call = 500 shares x 3
= 1,500
Share forfeiture amount is the received amount. So, 500 shares x 5
= 2,500
So, the journal entry for the forfeiture of shares is as follows-
Share Capital A/c Dr. 5,000
Securities Premium A/c Dr. 1,000
To Share Allotment A/c 2,000
To Share first and final Call A/c 1,500
To Share Forfeiture A/c 2,500