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Forfeiture of Shares which are Issued at a Discount

The journal entry for the forfeiture of shares issued at a discount is as follows:



Note: When shares are issued at a discount, the discount account is debited. Therefore, at the time of forfeiture of such a share, the discount account will be credited to cancel it.


Illustration 9


A Ltd. forfeited 200 equity shares of ₹ 10 each, fully called-up, held by Mr X, for non-payment of final call at ₹ 2 each. These shares were issued at a discount of 10 per cent. However, the application, allotment and first call money of ₹ 2, ₹ 3 and ₹ 2 per share, respectively, were paid by him. Give the journal entry for forfeiture.



Journal Entries in the Books of A Ltd.

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