Q10- Why in this question forfeiture entry we not write security premium reserve a/c Dr. {400*3)
10. The Directors of a company forfeited 400 shares of Rs 10 each issued at a premium of Rs 3 per share, for the non-payment of the First Call Money of Rs 3 per share. The final call of Rs 2 per share has not been made. Half the forfeited shares were reissued at Rs 2,000 fully paid. Record the journal Entries for the forfeiture and reissue of shares. [Delhi 2009]
When not specified, it is assumed that premium amount is received with allotment money. In this question amount of premium has already been received along with allotment money. Premium received is not utilised for meeting losses at the time of reissue of forfeited shares therefore it is not debited at the time of forfeiture of shares.