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
Rahul held 2,000 shares and failed to pay the first call; the shares were forfeited at once, before any final call was made. So the entry reverses only what was called up to the first call, and the premium not received is debited to Securities Premium Reserve.
Capital called up per share = ₹3 + ₹2 + ₹3 = ₹8
Share Capital A/c Dr = 2,000 × ₹8 = ₹16,000
Premium due on the first call and not received = 2,000 × ₹2 = ₹4,000
Securities Premium Reserve A/c Dr = ₹4,000
First call unpaid = 2,000 × ₹5 = ₹10,000
To Share First Call A/c = ₹10,000
Capital amount received = 2,000 × (₹3 + ₹2) = ₹10,000
To Share Forfeiture A/c = ₹10,000
NCERT (2026-27 edition): |