Reference no: EM132864996

A company's capital consists of 100 000 ordinary shares issued at $2 and paid to $1 per share. On 1 September, the first call of 50c was made on the ordinary shares. By 30 September, the call money received amounted to $45 000. No further payments were received, and on 31 October, the shares on which calls were outstanding were forfeited. On 15 November, the forfeited shares were reissued as paid to $1.50 for a payment of $1 per share. The appropriate cash amount from the reissue was received on 19 November. Costs of reissue amounted to $2 500. The company's constitution provided for any surplus on resale, after satisfaction of unpaid calls, accrued interest, and costs, to be returned to the shareholders whose shares were forfeited.

Question 1: The entry to record the forfeiture of shares is:

Select one:

Option 1: Share capital Dr 15 000

First call - ordinary shares Cr 5 000

Forfeited shares Cr 10 000

Option 2: Share capital Dr 20 000

First call - ordinary shares Cr 5 000

Forfeited shares Cr 15 000

Option 3: Forfeited shares Dr 10 000

Share capital Cr 10 000

Option 4: Share capital Dr 10 000

Forfeited shares Cr 10 000