Multiple choice

A company issued 100 equity shares of Rs.100 each at a discount of 10% to Raj. Raj failed to pay first call of Rs. 20 and second & final calls of Rs. 30 per share. As such, Raj's shares were forfeited. Which is the correct journal entry for forfeiture of shares?

  1. Equity Share Capital A/c 9,000 To Share First Call A/c 2,000 To Share Second and Final Call A/c Rs. 3,000 To Forfeited Share A/c 4,000

  2. Equity Share Capital A/c 10,000 To Discount on Issue of Share A/c 1,000 To Share First Call A/c 2,000 To Share Second and Final Call A/c Rs. 3,000

    To Forfeited Share A/c 4,000

  3. Equity Share Capital A/c 10,000 To Share First Call A/c 2,000 To Share Second and Final Call A/c Rs. 3,000 To Forfeited Share A/c 5,000

  4. Equity Share Capital A/c 9,000 To Discount on Issue of Share A/c 1,000 To Share First Call A/c 2,000 To Share Second and Final Call A/c Rs. 3,000 To Forfeited Share A/c 3,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Forfeited shares are those which were originally issued at discount, then discount relating to such forfeited shares must be written off. The relevant portion of discount on issue of shares should be credited.

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