XYZ Ltd. forfeited 500 equity shares of Rs. 100 each issued at a premium of 10%, fully called-up. The amount payable on shares is: on application Rs. 20, On allotment Rs.40 (including premium), On first and Final call Rs. 50. The company has called till the allotment stage. And these shareholders have only paid till application. The journal entry on forfeiture will be:

Share Capital A/c Dr. 20000

Securities premium A/c Dr. 10000

To Share Forfeiture A/c 25000

To Calls In Arrear A/c 5000

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Share Capital A/c Dr. 25000

Securities premium A/c Dr. 5000

To Share Forfeiture A/c 10000

To Calls In Arrear A/c 20000

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Share Capital A/c Dr. 2500

Securities premium A/c Dr. 500

To Share Forfeiture A/c 1000

To Calls In Arrear A/c 2000

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Share Capital A/c Dr. 2000

Securities premium A/c Dr. 1000

To Share Forfeiture A/c 2500

To Calls In Arrear A/c 500

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Solution

The correct option is B
Share Capital A/c Dr. 25000

Securities premium A/c Dr. 5000

To Share Forfeiture A/c 10000

To Calls In Arrear A/c 20000

The journal entry on forfeiture will be:

Share Capital A/c Dr. 25,000 (50050)

Securities Premium A/c Dr. 5,000 (50010)

To Share Forfeiture A/c 10,000 (50020)

To Calls In Arrear A/c 20,000 (50040)

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Similar questions

S Ltd issued 5,000 shares of Rs 100 each at a premium of Rs 10 each payable as follows:

$\begin{matrix} On Application & Rs 50 On Allotment & Rs 40 (including premium) On First and Final Call & Rs 40 \end{matrix}$

All the shares were applied for and instalments received on due dates with the exception of the Allotment and First & Final call on 100 shares; these shares were forfeited and re-issued as fully paid at Rs 105 per share.

Pass necessary Journal Entries in the books of the Company.

Q. D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium) & rest on first & final call. Applications were received for 1,20,000 shares. Excess application money was refunded to applications. All monies due were received except the allotment and first & final call monies on 1,000 shares. These shares were forfeited and reissued at Rs 9 per share.
On forfeiture of shares, Share Forfeiture Account will be credited by_____.

Q. The Orient Company offered for public subscription 20,000 equity shares of Rs.10 each at a premium of 10% payable at Rs.2 on application; Rs.4 on allotment including premium; Rs.3 on first call and Rs.2 on second and final call. Applications for 26,000 shares were received. Applications for 4,000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made and all the money were received except the final call on 500 shares which were forfeited. 300 of the forfeited shares were later on issued as fully paid at Rs. 9 per share. Give journal entries and prepare the balance sheet.

PRACTICAL PROBLEMS

(Forfeiture of shares issued at premium)

The Century Ltd. issued 8,000 shares of Rs 100 at a premium of 10% payable as under-

On Application	-	Rs 25	On Allotment	-	Rs 40 (including premium)
On First Call	-	Rs 20	On Second Call	-	Rs 25

Company called up allotment and both the calls which were duly received except Ramesh to whom 500 shares were allotted failed to pay allotment and calls.

Prepare Journal of Century Ltd.

Q. D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium) & rest on first & final call. Applications were received for 1,20,000 shares. Excess application money was refunded to applications. All monies due were received except the allotment and first & final call monies on 1,000 shares. These shares were forfeited and reissued at Rs 9 per share.
On reissue of forfeited shares, balance of share forfeiture account transferred to capital reserve account will be _____.

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