AB Ltd. issued 1,000 Equity Shares of ₹10 each at a premium of ₹2 per share. The amount payable was ₹4 on Application, ₹5 on Allotment, and ₹3 on the First and Final call. A person, X, to whom 100 shares were allotted, failed to pay allotment money and his shares were forfeited before making the first and final call. The amount debited in the Equity Share Capital Account at the time of forfeiture would be-

₹700

The correct answer is option 1- ₹700.

When Security Premium is not received, Security Premium account is debited, while passing the forfeiture entry. The remaining called-up amount is debited to equity share capital account. First and final call is not calledup.
So, called up amount = Application amount + allotment money - Securities premium
                                  = 4 + 5 - 2
                                  = 7

So total called up amount on 100 shares = 100 x 7
                                                                 = 700

Entry of forfeiture will be-
Share Capital A/c                        Dr. ₹700
Securities premium reserve A/c Dr. ₹200
         To Share Allotment A/c                      ₹500
         To share Forfeiture A/c                      ₹400
(Forfeiture of shares on which final call not made)

 So, 700 is debited to equity share capital account.