Question
A company issues 50,000 equity shares of ₹10 each at a
premium of ₹2, payable in three installments. On allotment, ₹4 including premium is due. One shareholder holding 2,000 shares fails to pay the allotment money, while all other shareholders pay. The company decides to forfeit his shares after the first call, which are remains unpaid. In the books of the company, how will the Share Forfeiture account be credited on forfeiture?Solution
Share forfeiture = Amount received on forfeited shares = 2,000 × (Application ₹4) = ₹8,000. Premium (not received) is not debited. Allotment unpaid = ₹8,000 (ignored). Thus, credit = ₹8,000 received.
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