Question

A Ltd forfeited 20 shares of K for non-payment of final call money of Rs. 3. Pass forfeiture entry when face value of share is Rs. 10.

Hint:

When forfeiting shares, ensure to record both the face value and any unpaid amounts as forfeited in the journal entries.

Answer 1

Step 1: Understand the forfeiture of shares.
When a shareholder fails to pay the final call money, the company can forfeit their shares. The forfeited shares are removed from the shareholder's account, and the company may reissue them.
Step 2: Pass the forfeiture entry.
In this case, the face value of each share is Rs. 10, and the final call money is Rs. 3, which has not been paid. The entry for the forfeiture of shares will be as follows: \[ \text{Journal Entry:} \] \[ \text{Bank Account} \, \text{Dr. \, \, 10 \times 20 = 200 \quad \text{(Amount received from K till the call money stage)} \] \[ \text{Share Capital Account} \, \text{Cr. \, 10 \times 20 = 200 \quad \text{(Face value of shares)} \] \[ \text{Forfeited Shares Account} \, \text{Cr. \, 3 \times 20 = 60 \quad \text{(Final call money forfeited)} \] \[ \text{Total Entry:} \quad \text{Rs. 200} \, \text{Cr. \, \text{and Rs. 60} \, \text{Cr. \]