Question

A company forfeited 800 equity shares of Rs. 10 each issued at a discount of 10% for non-payment of the first and final calls of Rs. 2 each. Calculate the amount forfeited by the company and pass the journal entry for forfeiture of the shares.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Equity Share Capital A/c   ...Dr.		8,000	-
	To Call-in-Arrears A/c		-	3,200
	To Discount on Issue of Shares A/c		-	800
	To Share Forfeiture A/c		-	4,000
	(Being 800 equity shares forfeited for the non-payment of first and final calls)

Working Notes:

Calculation of the amount transferred to share forfeiture:

Amount received per share = Face Value of the Share − Non-Payment – Discount on Issue of Shares

= 10 – 4 – 1

= ₹ 5

Amount of forfeiture = ₹ 5 × 800

= ₹ 4,000