Question

Jupiter Ltd. issued shares of ₹100 each at a premium of 40% payable as follows:

On Application	₹50
On Allotment	₹70 (including premium)
On First & Final Call	₹20

Vinita, who applied for 700 shares and to whom 400 shares were allotted on prorata basis did not pay allotment and her shares were immediately forfeited. Pass entry for forfeiture of shares.

Answer 1

Journal entries In the books of Jupiter Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Equity Share Capital A/c Dr (400 × ₹80)     ...Dr.		32,000
	Securities Premium Reserve A/c     ...Dr.		13,000
	To Share Allotment A/c			13,000
	To Share Forfeiture A/c			32,000
	(Forfeiture of 400 shares for non‑payment of allotment; excess application adjusted; premium unreceived reversed)

Working Notes:

1) Called up at forfeiture (till allotment):
Application ₹50 (capital)
Allotment ₹70 = ₹30 (capital) + ₹40 (premium) → Capital called = 50 + 30 = ₹80/share

2) Application paid by Vinita = 700 × ₹50 = ₹35,000
Required for 400 shares = 400 × ₹50 = ₹20,000
Excess from application = ₹15,000

3) Allotment due on 400 shares
= 400 × ₹70 = ₹28,000
Capital part = 400 × ₹30 = ₹12,000
Premium part = 400 × ₹40 = ₹16,000; excess left for premium = ₹3,000
Unpaid (arrears) on allotment = ₹28,000 − ₹15,000 = ₹13,000
Hence unreceived premium = ₹16,000 − ₹3,000 = ₹13,000 → debit SPR ₹13,000.

4) Amount received (towards capital) on these 400 shares
= Application ₹20,000 + Allotment capital (from excess) ₹12,000 = ₹32,000 → credit Share Forfeiture A/c ₹32,000