A Ltd forfeited 100 shares of ₹10 each issued at a Premium of ₹2, for non-payment of final call of ₹3. Securities Premium has been received. How will the forfeiture account be treated?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Credited by ₹700.
If the Security Premium Reserve has been received and there is no requirement to write off the premium, then the forfeiture account would be treated as follows:
Share Capital A/c (Called up amount 100 x 10) Dr. ₹1,000
To Share Forfeiture A/c (Paid up amount 100 x 7) ₹700
To Share Calls A/c (100 x 3) ₹300