The Company has issued warrants to promoters/ promoter group. They have paid 10% of the amount payable on allotment of warrants at the rate of 120/- (face value - Rs. 5/-) for 10,00,000 warrants. Out of 10 lakh warrants they have fully subscribed for the 5,00,000 warrants convertible to equity shares. The balance 5,00,000 warrant money has not been paid by them. hence, the 10% warrant money as paid on the balance 5 lakh warrants is forfieted. How to show in the books of account the forfited amount.
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forfieture of warrants - accounting entry
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For the 500000 shares the entry already would have been
Bank a/c DR 6000000
To Share allotment account 2500000
To Share premium a/c 3500000
Now on forfeiture,
Share allotment Dr 2500000
To forfeited shatres 2500000
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