How to calculate forfeiture of shares under prorata category including premium?
Let us take the following example to understand this concept related in the question.
Praharsh Ltd. issued shares of Rs 10 each at a premium of Rs 2.
| Applied | Allotted |
Category I | 50,000 shares | 25,000 shares |
Ram, who belongs to this, applied for 4,000 shares. He paid only the application money of Rs 3 but failed to pay the allotment money of Rs 5 (including premium of Rs 2) and also the first call of Rs 4. Due to his failure to pay the amount, his shares were forfeited after the first call. Pass the necessary Journal entries for the forfeiture of the shares.
Journal | |||||
Date | Particulars | L.F. | Debit Amount Rs | Credit Amount Rs | |
| Share Capital A/c (2,000 shares × Rs 10) | Dr. |
| 20,000 |
|
| Security Premium A/c (2,000 shares × Rs 2) | Dr. |
| 4,000 |
|
| To Share Forfeiture A/c |
|
|
| 12,000 |
| To Share Allotment A/c |
|
|
| 4,000 |
| To Share First Call A/c (2,000 shares × Rs 4) |
|
|
| 8,000 |
| (Forfeiture of 2,000 shares) |
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Working Notes:
Number of shares applied by Ram = 4,000 shares
Number of shares allotted to Ram 
Amount Received from Ram on Application (4,000 shares × Rs 3) | = | 12,000 |
Less: Amount Actually Utilised on Application (2,000 shares × 3) | = | (6,000) |
Excess Money Received on Application | = | Rs 6,000 |
Amount to be paid on Allotment (2,000 shares × Rs 5) | = | 10,000 |
Less: Excess Money Received on Application | = | (6,000) |
Amount Unpaid on Allotment (including premium) | = | Rs 4,000 |