Sahil, a share holder, failed to pay the money for second and final call of Rs. 20 on 1,000 shares issued to him at Rs. 120 (face value of Rs. 100 per share). His shares were forfeited after the second and final call. Which is correct about share forfeiture:

Understanding the situation:

• Total shares = 1,000
• Face value per share = Rs. 100
• Issue price per share = Rs. 120 (Face value Rs. 100 + Premium Rs. 20)
• Amount unpaid = Second and Final Call of Rs. 20 per share

---

Calculating amounts paid:

Total amount to be paid per share = Rs. 120

This Rs. 120 consists of:

• Face value: Rs. 100
• Securities Premium: Rs. 20

Since Sahil failed to pay the final call of Rs. 20 (on face value), the amounts already paid are:

On face value = Rs. 100 - Rs. 20 = Rs. 80 per share

Securities Premium = Rs. 20 per share (already paid, as premium is typically called with application/allotment)

---

Journal entry for forfeiture:

Share Capital A/c Dr. → Rs. 1,00,000 (1,000 × Rs. 100)

Securities Premium A/c Dr. → Rs. 20,000 (1,000 × Rs. 20)

To Share Forfeiture A/c → Rs. 80,000 (amount paid on face value)

To Share Final Call A/c → Rs. 20,000 (amount not paid)

---

Share Forfeiture Account is credited with the amount already received on face value only, which is Rs. 80,000 (1,000 shares × Rs. 80 per share).

The Securities Premium of Rs. 20,000 is not credited to Share Forfeiture Account as it is transferred back to Securities Premium Reserve Account (by debiting Securities Premium A/c).

Correct Option: 3