Question

Manas Ltd. forfeited 600 shares of ₹10 each for the non-payment of first call of ₹2 per share. The final call of ₹3 per share was not yet called. In the journal entry for forfeiture of shares, ‘Share Forfeiture Account’ will be:

• A. Debited by ₹1,200
• B. Credited by ₹1,200
• C. Debited by ₹3,000
• D. Credited by ₹3,000

Hint:

Always credit the amount actually received to the Share Forfeiture Account. Multiply per share paid-up by the number of shares.

Answer 1

The Correct Option is D

Face value per share = ₹10
Amount not yet called = ₹3 (final call)
Amount called = ₹7
Amount unpaid = ₹2
Amount paid = ₹5

Total paid-up money for 600 shares = 600 × ₹5 = ₹3,000
This amount is credited to the Share Forfeiture Account.

Journal Entry: \begin{verbatim} Share Capital A/c Dr. 4,200 To Share Forfeiture A/c 3,000 To Calls in Arrears A/c 1,200 \end{verbatim}