Question

A company forfeited 100 equity shares of Rs.10 each issued at a premium of 20% for non-payment of the final call of Rs. 5, including the premium. Show the journal entry for forfeiture of shares.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Equity Share Capital A/c   ...Dr.		1,000	-
	Securities Premium A/c   ...Dr.		200	-
	To Calls-in-Arrears A/c / Equity Share Final Call A/c		-	500
	To Share Forfeiture A/c		-	700
	(Being 100 equity shares forfeited for the non-payment of final call money)

Working Note:

Premium Amount = `10 xx 20/100`

= Rs. 2

Breakdown of Final Call = (Face Value) + (Premium)

= Rs. 3 + Rs. 2

= Rs. 5

Amount Already Paid = Total Value − Unpaid Final Call

= Rs. 12 − Rs. 5

= Rs. 7

Share Capital = 100 × 10

= Rs. 1,000

Securities Premium = 100 shares × Rs. 2 (Unpaid Premium)

= Rs. 200

Calls-in-Arrears = 100 shares × Rs. 5 (Total Unpaid amount)

= Rs. 500

Share Forfeiture = 100 shares x Rs. 7 (Total Paid amount)

= Rs. 700