The Latest Technology Company Ltd. offered to public for subscripttion of
50,000 shares of Rs. 20 each at a premium of Rs. 5 per share. The amount
was payable as under:
On application Rs. 5 per share
On allotment Rs. 12 per share (Including premium of Rs 5
per share)
On first call Rs. 4 per share
On Second and Final call Rs. 4 per share
Applications were received for all the shares. Allotment was made to all
the applicants in full. Ashima failed to pay allotment and call money on
200 shares held by her. Reshma was allotted 300 shares. She did not pay
the call money. Their shares were forfeited. Make necessary journal entry
for the forfeiture only.
(i) Share Capital A/c (200 × 20) Dr. 4000
Securities Premium A/c (200 × 5) Dr. 1000
To Share Forfeited A/c (200 × 5) 1000
To Share Allotment A/c (200 × 12) 2400
To Share First Call A/c (200 × 4) 800
To Share Second and Final call A/c (200 × 4) 800
(Forfeiture of 200 shares held by Ashima
who did not pay allotment and call money).
(ii) Share Capital A/c (200 × 20) Dr. 6000
To Shares forfeited A/c 3600
To Share First Call A/c 1200
To Share Second Call A/c 1200
(Forfeiture of 300 shares held by Reshma)
the share premium a/c is debited only to cancel the security premium a/c because while making the allotment due the following entries would have been passed (only ashima's case )
Share allotment a/c Dr. (200 x12) 2400
To Share premium a/c (200x 5) 1000
To share capital (200 x 7) 1400
so the debit of share premium at the time of passing the entry of forfeiture of share is mere a cancellation of share premium a/c
because if we donot debit the share premium a/c then the Premium a/c will always be in books of accounts while the payment of the premium has not received by co. hence it will become a ficticious
i hope u will understand