Question

Y Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received and the second and final call of Rs 20 per share was not yet called. 20 of these shares were re-issued as Rs 80 paid up for Rs 70 per share.
On forfeiture, the Share Capital Account will be _____________.

• A. Debited with Rs 1,600
• B. Credited with Rs 1,600
• C. Debited with Rs 4,000
• D. Credited with Rs 1400

Answer 1

Answer: (C)

Debited with Rs 4,000

The share capital is debited when writing the journal entry for forfeiture of shares.

$ShareCapitalAmount=No.ofsharesforfeited\times calledupvalue$

Substitute the values in above equation

$ShareCapitalAmount=50shares\times Rs80=Rs4,000$.