Eicher Ltd. issued 50,000 shares of ₹10 each at a premium of ₹5 per share payable as follows:
|
On application |
₹3 per share |
|
On allotment |
₹5 (including ₹3 Premium) |
|
On First Call |
₹5 (including ₹2 Premium) |
|
On Final Call |
Balance amount |
Application were received for 72,000 shares. Directors allotted 50,000 shares to the applicants applying for 65,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards sum due on allotment. All the money was duly received with the exception of first call from Rahul, who applied for 2,600 shares. Due to non payment of 1st call his share were forfeited immediately. Later on these share were re-issued at minimum issue price.
On the basis of following case study, answer the question.
Record journal entry for forfeiture of Rahul's shares.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) -
Share Capital A/c Dr ₹16,000
Securities Premium Reserve A/c Dr ₹4,000
To Share Ist call A/c ₹10,000
To Share forfeiture A/c ₹10,000
Shares applied by Rahul = 2,600
Shares allotted to Rahul = 50,000/65,000 x 2,600
= 2,000
Excess money received on application by Rahul = 600 shares x 3
= 1,800
This will be adjusted against allotment.
Money due on allotment = 2,000 x 5
= 10,000
Money received on allotment = 10,000 - 1,800
= 8,200
Money due on 1st Call = 2,000 shares x 5
= 10,000 including premium
Money not received = 10,000
Money called up without premium = 2,000 shares x 8
= 16,000
Premium that is not received = 2,000 shares x 2
= 4,000
Amount received = 2,000 shares x 5
= 10,000
Share Capital A/c Dr. ₹16,000 (called up amount)
Securities Premium Reserve A/c Dr. ₹4,000 (called up premium that is not received)
To Share Ist call A/c ₹10,000 ( Not received on call)
To Share forfeiture A/c ₹10,000 (amount received)