Ts grewal practical problems of Share Capital - Company Accounting (2023-2024)

 Share Capital - Company Accounting Ts grewal solution volume-2(2023-2024):part-2

Question 53:

Star Ltd. forfeited 500 Equity Shares of  ` 100 each for non-payment of first call of  ` 30 per share . The final call of  ` 10 per share was not yet made. Out of these, 60% shares were reissued for  ` 39,000 fully paid. journalise the forfeiture and reissue of shares.

 

Answer:

Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Equity Share Capital A/c  (500×90)	Dr.		45,000
	To  Equity Share 1st Call A/c (500×30)				15,000
	To Share Forfeited A/c (500×60)				30,000
	( 500 equity shares forfeited for non-payment of final call)
	Bank A/c (300×130)	Dr.		39,000
	To Equity Share Capital A/c (300×100)				30,000
	To Security Premium Reserve A/c (300×30)				9,000
	(300 shares are reissued @130 per share)
	Share Forfeited A/c	Dr.		18,000
	To Capital Reserve A/c				18,000
	( Profit on reissue of 300 shares transferred to Capital Reserve)

 

Working Note:

 

Amount transferred to Capital Reserve

Shares Re-issued = 300

Shares Forfeited = 500

Amount forfeited in respect of 300 shares = Amount Forfeited × Shares Re-issued Shares Forfeited

                                                                 = 30,000×300500=18,000

 

Question 54:

Super Star Ltd. makes an issue of 10,000 Equity Shares of  ` 100 each, payable as:

On application and allotment	` 50 per share,
On first call	` 25 per share,
On second and final call	` 25 per share.

Members holding 400 shares did not pay the second and final call and the shares are duly forfeited, 200 of which are reissued as fully paid-up @ ` 50 per share. Pass journal entries in the books of the company.

Answer:

Book of Super Star Limited Journal
Date	Particulars		L.F.	Debit `	Credit  `
	Bank A/c	Dr.		5,00,000
	To Equity Share Application and Allotment A/c				5,00,000
	(Share Application and Allotment money received for 10,000 shares at  ` 50 each)
	Equity Share Application and Allotment A/c	Dr.		5,00,000
	To Equity Share Capital A/c				5,00,000
	(Share Application and Allotment money transferred to Equity Share Capital Account)
	Equity Share First Call A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,50,000
	(Share First Call due on 10,000 shares of  ` 25 each)
	Bank A/c	Dr.		2,50,000
	To Equity Share First-Call A/c				2,50,000
	(First Call money received)
	Equity Share Final Call A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,50,000
	(Equity Share Final Call due on 10,000 shares of  ` 25 each)
	Bank A/c	Dr.		2,40,000
	Calls-in-Arrears A/c	Dr.		10,000
	To Equity Share Final Call A/c				2,50,000
	(Share Final Call of  ` 25 per share received on 9,600 shares and holders of 400 shares failed to pay it)
	Equity Share Capital A/c	Dr.		40,000
	To Share Forfeiture A/c				30,000
	To Calls-In-Arrears A/c				10,000
	(400 shares of  ` 100 each forfeited for the non-payment final call  ` 25 per share)
	Bank A/c	Dr.		10,000
	Share Forfeiture A/c	Dr.		10,000
	To Equity Share Capital A/c				20,000
	(200 shares of  ` 100 each re-issued at  ` 50 per share fully paid-up)
	Share Forfeiture A/c	Dr.		5,000
	To Capital Reserve A/c				5,000
	(Balance in Share Forfeiture of 200 shares of after re-issue, transferred to Capital Reserve)

 

Working Note-

Share Forfeiture	`	75	Cr.
Share Forfeiture	`	50	Dr.
Balance in Share Forfeiture Account for re-issued shares	`	25	Cr. per share

Capital Reserve = Balance in Share Forfeiture Account for re-issued shares × Number of Share reissued

=  ` 25 × 200 =  ` 5,000

 

Question 55:

Give necessary journal entries:
  (i) The Directors of Devendra Ltd. resolved on 1st January, 2010 that Equity Shares of  ` 10 each,  ` 8 paid-up be forfeited for non-payment of final call of  ` 2. On 1st February, 60 of these shares were reissued @  ` 7 per share as fully paid-up.
  (ii) Virender Limited forfeited 20 shares of  ` 100 each( ` 60 called-up) issued at par to Mukesh on which he had paid  ` 20 per share . Out of these, 15 shares were reissued to Sanjeev as  ` 60 paid-up for  ` 45 per share.

Answer:

(i)	Book of Devendra Limited
Journal
Date		Particulars		L.F.	Debit `	Credit `
2010
Jan. 01		Equity Share Capital A/c	Dr.		1,000
		To Share Forfeiture A/c				800
		To Calls-in-Arrears A/c				200
		(100 shares of  ` 10 each forfeited for the non-payment of  ` 2 per share)
Feb. 01		Bank A/c	Dr.		420
		Share Forfeiture A/c	Dr.		180
		To Equity Share Capital A/c				600
		(60 shares of  ` 10 each re-issued at  ` 7 per share, fully paid-up)
		Share Forfeiture A/c	Dr.		300
		To Capital Reserve A/c				300
		(Balance in Share Forfeiture Account of 60 shares after re-issue transferred to Capital Reserve)

 

Working Note:

 

Forfeiture of re-issued shares

Share Forfeiture Credit	`	8	per share
Share Forfeiture Debit	`	3	per share
Balance in Share Forfeiture after re-issue		5	per share

General Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued

=  ` 5 × 60

=  ` 300

 

(ii)	Book of Virender Limited
	Journal
Date		Particulars		L.F.	Debit `	Credit `
		Share Capital A/c	Dr.		1,200
		To Share Forfeiture A/c				400
		To Calls-in-Arrears A/c				800
		(20 shares of  ` 100 each  ` 60 called-up forfeited for the non-payment of  ` 40 per share)
		Bank A/c	Dr.		675
		Share Forfeiture A/c	Dr.		225
		To Share Capital A/c				900
		(15 shares of  ` 100 each re-issued for  ` 45 per share as  ` 60 paid-up)
		Share Forfeiture A/c	Dr.		75
		To Capital Reserve A/c				75
		(Balance in Share Forfeiture of 15 re-issued shares transferred to Capital Reserve)

 

Working Note:

 

Forfeiture of reissued shares
Share Forfeiture Credit (at the time of forfeiture )	`	20	per share
Share Forfeiture Debit (at the time of re-issue)	`	15	per share
Balance in Share Forfeiture after re-issue	`	5	per share

Capital Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued

=  ` 5 × 15 Shares

=  ` 75

 

 

Question 56:

Show the forfeiture and reissue entries under each of the following cases:

(i) KBC  Ltd. forfeited 300 shares of  ` 10 each,  ` 8 called-up held by Mr.  A for non-payment of second call money of  ` 3 per share. These shares were reissued to Mr. Z for  ` 10 per share as fully paid-up.
(ii) KK Ltd. forfeited 400 shares of  ` 10 each, fully called-up, held by Mr. B for non-payment of final call money of  ` 4 per share. These shares were reissued to Mr. T at  ` 12 per share as fully paid-up.
(iii) Light Ltd. forfeited 250 shares of  ` 10 each, fully called-up held by Mr. C for non-payment of allotment money of   ` 3 per share and first and final call money of  ` 4 per share. These shares were reissued @  ` 8 per share as fully paid-up to Mr. P.

Answer:

(i)	Books of KBC Limited Journal
Date		Particulars		L.F.	Debit  ( ` )	Credit  ( ` )
		Share Capital	Dr.		2,400
		To Share Forfeiture A/c				1,500
		To Calls-in-Arrears A/c				900
		(300 shares of  ` 10 each on which had called  ` 8, forfeited for non-payment of second call  ` 3 per share)
		Bank A/c	Dr.		3,000
		To Share Capital A/c				3,000
		(300 shares of  ` 10 each re-issued)
		Share Forfeiture A/c	Dr.		1,500
		To Capital Reserve A/c				1,500
		(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

Working Notes-

 

Share Forfeiture Credit (at the time of forfeiture of shares)	1,500
Less: Share Forfeiture Debit (at the time of re-issue shares)	NIL
Balance in Share Forfeiture after re-issue of shares	1,500

 

Capital Reserve = Balance in Share Forfeiture of re-issued shares

=  ` 1,500

(ii)	Books of KK Limited Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Share Capital A/c	Dr.		4,000
	To Share Forfeiture A/c				2,400
	To Calls-in-Arrears A/c				1,600
	(400 shares of  ` 10 forfeited for the non-payment of final call  ` 4 per share)
	Bank A/c	Dr.		4,800
	To Share Capital A/c				4,000
	To Securities Premium A/c				800
	(400 shares of  `10 each re-issued at  ` 12 per share as fully paid-up)
	Share Forfeiture A/c	Dr.		2,400
	To Capital Reserve A/c				2,400
	(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

 

Working Notes-

 

Share Forfeiture Credit (at the time of forfeiture of shares)	2,400
Less: Share Forfeiture Debit (at the time of re-issue shares)	NIL
Balance in Share Forfeiture after re-issue of shares	2,400

 

Capital Reserve = Balance in Share Forfeiture of re-issued shares

=  ` 2,400

(iii)	Books of Light Limited Journal
Date		Particulars		L.F.	Debit  ( ` )	Credit  ( ` )
		Share Capital A/c	Dr.		2,500
		To Share Forfeiture A/c (250×3)				750
		To Calls-in-Arrears A/c				1,750
		(250 shares of  ` 10 each forfeited for the non-payment  ` 7 per share)
		Bank A/c	Dr.		2,000
		Share Forfeiture A/c	Dr.		500
		To Share Capital A/c				2,500
		(250 shares of  ` 10 each re-issued for  ` 8 per share as fully paid-up )
		Share Forfeiture A/c	Dr.		250
		To Capital Reserve A/c				250
		(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

Working Notes-

 

Share Forfeiture Credit (at the time of forfeiture of shares)	750
Less: Share Forfeiture Debit (at the time of re-issue shares)	500
Balance in Share Forfeiture after re-issue of shares	250

Capital Reserve = Balance in Share Forfeiture of re-issued shares =  ` 250

Question 57:

Rekha holds 100 shares of  ` 10 each on which he has paid  ` 1 per share on application.
Sunita holds 200 shares of  ` 10 each on which he has paid  ` 1 and  ` 2 per share on application and allotment respectively.
Teena holds 300 shares of  ` 10 each and has paid  ` 1 on application,  ` 2 on allotment and  ` 3 on first call. They all fail to pay their arrears and the second call of  ` 2 per share . Shares are forfeited and subsequently reissued @  ` 11 per share as fully paid-up.
journalise the above.

 

Answer:

 

Application	`	1
Allotment	`	2
First Call	`	3
Second Call	`	2
	`	8	Called-up

 

Journal Entries
Date	Particulars		L.F.	Debit `	Credit `
	Forfeiture of Shares
	Shares of A
	Share Capital A/c	Dr.		800
	To Share Forfeiture A/c				100
	To Calls-In-Arrears A/c				700
	(100 shares of  ` 10 each,  ` 8 called-up, held by A forfeited for the non-payment of  ` 7 per share)
	Shares of B
	Share Capital A/c	Dr.		1,600
	To Share Forfeiture A/c				600
	To Calls-in-Arrears A/c				1,000
	(200 shares of  ` 10 each,  ` 8 called-up, held by B forfeited for non-payment of  ` 5 per share)
	Shares of C
	Share Capital A/c	Dr.		2,400
	To Share Forfeiture A/c				1,800
	To Calls-in-Arrears A/c				600
	(300 shares of  ` 10 each,  ` 8 called-up held by C forfeited for the non-payment of  ` 2 per share)
	Re-issue of shares
	Bank A/c	Dr.		6,600
	To Share Capital A/c				6,000
	To Securities Premium A/c				600
	(600 shares of  ` 10 each re-issued at  ` 11 per share fully paid-up)
	Share Forfeiture A/c	Dr.		2,500
	To Capital Reserve A/c				2,500
	(Share Forfeiture transferred to Capital Reserve)

 

Working Note:

 

Share Forfeiture of 100 shares held by Rekha	`	100	Cr.
Share Forfeiture of 200 shares held by Sunita	`	600	Cr.
Share Forfeiture of 300 shares held by Teena	`	1,800	Cr.
Total Share Forfeiture credit (at the time of cancellation of shares)	`	2,500

 

Calculation of Capital Reserve

 

Total Share Forfeiture (at the time of cancellation of shares) =  ` 2,500 Cr.

Less: Total Share Forfeiture (at the time of re-issue of shares) = (NIL) Dr.

Capital Reserve = ` 2,500

 Question 58:

Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) Basak Ltd. forfeited 20 shares of  ` 10 each,  ` 7 called-up on which the shareholder had paid application and allotment money of  ` 5 per share. Out of these, 15 shares were reissued to Naresh as  ` 7 per share paid-up for  ` 8 per share.
(ii) Y Ltd. forfeited 90 shares of  ` 10 each,  ` 8 called-up issued at a premium of  ` 2 per share to 'R' for non-payment  of allotment money of  ` 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as  ` 8 called-up for  ` 10 per share.

Answer:

Journal
Date	Particulars		L.F.	Debit `	Credit      `
(i)	Share Capital A/c (20 Shares × 7)	Dr.		140
	To Share Forfeiture A/c (20 Shares × 5)				100
	To Calls-in- Arrears A/c (20 Shares × 2)				40
	(20 Shares of  ` 10 each,  ` 7 called-up forfeited for the non-payment of call)
	Bank A/c (15 Shares × 8)	Dr.		120
	To Share Capital A/c (15 Shares × 7)				105
	To Securities Premium A/c (15 Shares × 1)				15
	(15 shares were reissued as  ` 7 paid-up for  ` 8 per share)
	Shares Forfeiture A/c (15 Shares × 5)	Dr.		75
	To Capital Reserve A/c				75
	(Transfer of profit on re-issue of 15 shares)
(ii)	Share Capital A/c (90 Shares × 8)	Dr.		720
	Securities Premium A/c (90 Shares × 2)	Dr.		180
	To Share Forfeiture A/c (90 Shares × 5)				450
	To Share Allotment A/c (90 Shares × 5)				450
	(Shares forfeited for non-payment of allotment)
	Bank A/c (80 Shares × 10)	Dr.		800
	To Share Capital A/c (80 Shares × 8)				640
	To Securities Premium A/c (80 Shares × 2)				160
	(80 shares were reissued for  ` 10,  ` 8 called-up)
	Shares Forfeiture A/c (80 Shares × 5)	Dr.		400
	To Capital Reserve A/c				400
	(Transfer of profit on re-issue of 80 shares)

 

Working Notes-

 

Note 1
Profit on 20 forfeited shares=100

Profit on 15 forfeited shares=100×15/20=75

forfeited shares(Cr.)=75  `.(Cr.)

forfeited shares(Dr.)=Nil

Capital reserve=75  `.

 

Note 2
Profit on 90 forfeited shares=450

Profit on 80 forfeited shares=450×80/90=400       

forfeited shares(Cr.)=400  `.(Cr.)

forfeited shares(Dr.)=Nil

Capital reserve=400  `.

 

Page No 9.120:

Question 59: Jain Ltd. invited applications for issuing 1,12,000 equity shares of ` 10 each at par. The amount per share

was payable as follows:

On Application	`1
On Allotment	`2
On First call	`3
On Second and Final call	`4

Applications for 1,00,000 shares were received. Shares were fully allotted to all the applicants. Ramesh

failed to pay his allotment money which was ` 2,000. His shares were forfeited immediately. Suresh did

not pay the first call on 500 shares applied by him. His shares were forfeited after the first call. The forfeited

shares of Ramesh and Suresh were reissued at 9 per share fully paid-up. Afterwards the second and final

call was made and was duly received.

Pass necessary Journal entries for the above transactions in the books of Jain Ltd. (CBSE 2019)

 

Answer:

Journal
Date	Particulars		L.F.	Debit `	Credit  `
(i)	Bank  A/c (1,00,000 × 1)	Dr.		1,00,000
	To Equity share application A/c				1,00,000
	(Being Application money received)
	Equity share application A/c	Dr.		1,00,000
	To Equity Share Capital A/c				1,00,000
	(Being share application money transferred to share Capital)
	Equity share allotment  A/c	Dr.		2,00,000
	To Equity Share Capital A/c				2,00,000
	(Being allotment due)
	Bank A/c (2,00,000-2,000)			1,98,000
	To  Equity share allotment  A/c				1,98,000
	(Being allotment money received)
	Equity Share Capital A/c
	To  Equity share allotment  A/c
	To  Equity share forfeiture  A/c
	(Being 1000 share of Ramesh forfeited due to non- payment of allotment)
	Equity share First and final Call  A/c	Dr.		2,97,000
	To Equity Share Capital A/c (99,000×3)				2,97,000
	(Being allotment due)
	Bank A/c (98,500×3)			2,95,500
	To  Equity share allotment  A/c				2,95,500
	(Being allotment money received except 500 shares of Suresh)
	Equity Share Capital A/c (500×6)			3,000
	To  Equity share first call  A/c (500×3)				1,500
	To  Equity share forfeiture  A/c (500×3)				1,500
	(Being 1000 share of Suresh forfeited due to non- payment of first Call)
	Bank A/c (1,000+500×9)			13,500
	Equity share forfeiture  A/c (1500×1)			1,500
	To  Equity Share Capital A/c				15,000
	(Being forfeited shares re-issue of Ramesh of 1000 and Suresh 500 and re-issued at 9 fully paid-up)
	Equity share forfeiture  A/c (1,000+1,500-1,500)			1,000
	To capital Reserve A/c				1,000
	(Being amount transferred to capital reserve)
	Equity Share Second and final call A/c			3,94,000
	To  Equity Share Capital A/c (98,500×4)				3,94,000
	(Being final Call due)
	Bank A/c			3,94,000
	To Equity Share Second and final call A/c				3,94,000
	(Being final call money received)

 

Question 60:

Software Ltd. company with registered capital of  ` 5,00,000 in shares of  ` 10 each issued 20,000 of such shares payable  ` 2 on application,  ` 4 on allotment,  ` 2 on first call  ` 2 on final call. All the money payable on allotment was duly received but on the first call being made, one shareholder paid the entire balance on his holding of 300 shares and five shareholders with a total holding of 1,000 shares failed to pay their dues on the first call. These shares were forfeited for non-payment of first call money. Final call was made and all the money due was received. Later on, forfeited shares were reissued @  ` 6 per share as fully paid-up.
Record the above in the company's Journal and prepare the Balance Sheet.

Answer:

 

Amount payable as

Application	`	2
Allotment	`	4
First Call	`	2
Final Call	`	2
		10

 

Books of Software Ltd. Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Bank A/c	Dr.		40,000
	To Share Application A/c				40,000
	(Share application money received for 20,000 shares at  `  2 each)
	Share Application A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(Share application money of 20,000 shares at  `  2 each transferred to Share Capital)
	Share Allotment A/c	Dr.		80,000
	To Share Capital A/c				80,000
	(Share allotment due on 20,000 shares at  `  4 each)
	Bank A/c	Dr.		80,000
	To Share Allotment A/c				80,000
	(Share allotment money received)
	Share First Call A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(Share first call due on 20,000 shares at  `  2 each)
	Bank A/c	Dr.		38,600
	Call-in-Arrears A/c (1,000×2)	Dr.		2,000
	To Share First Call A/c				40,000
	To Calls-in-Advance (300×2)				600
	(Share first call of  `  2 per share received on 19,000 shares along with calls-in-advance of 300 shares at  `  2 each and holders of 1,000 shares failed to pay the first call)
	Share Capital A/c	Dr.		8,000
	To Share Forfeiture A/c (1,000×6)				6,000
	To Calls-In-Arrears A/c				2,000
	(1,000 shares of  `  10 each on which  `  8 had called, forfeited for non-payment of first call  `  2 per share)
	Share Final Call A/c	Dr.		38,000
	To Share Capital A/c				38,000
	(Share final call due on 19,000 shares at  `  2 each)
	Bank A/c	Dr.		37,400
	Calls-In-Advance A/c	Dr.		600
	To Share Final Call A/c				38,000
	(Share final call received from 18,700 shares and calls-in-advance of 300 shares adjusted)
	Bank A/c	Dr.		6,000
	Share Forfeiture A/c	Dr.		4,000
	To Share Capital A/c				10,000
	(1,000 shares, re-issued at  `  6 per share as fully paid-up)
	Share Forfeiture A/c	Dr.		2,000
	To Capital Reserve A/c				2,000
	(Balance of Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Software Ltd.
Balance Sheet
Particulars	Note No.	( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	2,00,000
b. Reserves and Surplus	2	2,000
2. Non-Current Liabilities
3. Current Liabilities
Total		2,02,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,02,000
Total		2,02,000

 

NOTES TO ACCOUNTS

Note No.	Particulars	( `)
1	Share Capital
	Authorised Share Capital
	50,000 shares of  ` 10 each	5,00,000
	Issued Share Capital
	20,000 shares of  ` 10 each	2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	20,000 shares of  ` 10 each	2,00,000
2	Reserves and Surplus
	Capital Reserve	2,000
3	Cash and Cash Equivalents
	Cash at Bank	2,02,000

 

Working Notes:

 

Share Forfeiture Credit (at the time of forfeiture of shares)	6,000
Less: Share Forfeiture Debit (at the time of re-issue shares)	4,000
Balance in Share Forfeiture Account after re-issue of shares	2,000

Capital Reserve = Balance in Share Forfeiture Account of re-issued shares =  ` 2,000

Question 65:

Pass journal entries in the following cases:

NK  Ltd  forfeited 200 Equity Shares of  `10 each , issued at a premium of   ` 5 per share , held by Ram for non-payment of the final call of   ` 3 per share . Of these , 100 shares were reissued  to Narender at a discount of    ` 4 per share .

Answer:

	Journal
Date	Particulars		L.F.	Debit `	Credit `
	Equity Share Capital A/c	Dr.		20,000
	To Share Forfeiture A/c (2,000 ×  ` 7)				14,000
	To Calls-in-Arrears A/c				6,000
	(2,000 shares of  ` 10 each forfeited for the non-payment of  ` 3 per share)
	Bank A/c	Dr.		600
	Share Forfeiture A/c (100 ×  ` 4)	Dr.		400
	To Equity Share Capital A/c				1,000
	(100 shares of  ` 10 each reissued at  ` 6 per share as fully paid-up)
	Share Forfeiture A/c	Dr.		300
	To Capital Reserve A/c				300
	(Balance in Share Forfeiture of 100 re-issued shares transferred to Capital Reserve )

 

Working Note-

Share Forfeiture of re-issued shares
Share Forfeiture	Cr.	` 7	per share
Share Forfeiture	Dr.	` 4	per share
Balance in share forfeiture after re-issue	Cr.	3	per share

Capital Reserve = Balance in Share Forfeiture after re-issue × No. of shares re-issued

= Re 3 × 100 shares

=  ` 300

 

Question 66:

 VT Ltd forfeited 200 shares of  ` 10 each , issued at a premium of  ` 5 per share , held by Mohan for non-payment of the final call of  ` 3 per share . 100 out of these shares  were reissued to Narender at a discount  of  ` 4 per share . Journalise.

Answer:

	Books of VT Limited Journal
Date		Particulars		L.F.	Debit `	Credit `
		Share Capital A/c (200 ×  ` 10)	Dr.		2,000
		To Share Forfeiture A/c (200 ×  ` 7)				1,400
		To Calls-in-Arrears A/c				600
		(200 shares of  ` 10 each forfeited for non-payment of  ` 3 each)
		Bank A/c	Dr.		600
		Share Forfeiture A/c (100 ×  ` 4)	Dr.		400
		To Share Capital A/c				1,000
		(100 shares of  ` 10 each re-issued at  ` 6 per share fully paid-up)
		Share Forfeiture A/c	Dr.		300
		To Capital Reserve A/c				300
		(Balance in share forfeiture of 100 shares transferred to capital reserve)

 

Working Notes:

 

Share Forfeiture of re-issued shares
Share Forfeiture Cr.	` 7	per share
Share Forfeiture Dr.	` 4	per share
Balance in Share Forfeiture after re-issue	` 3	per share

 

Capital Reserve	= Balance in Share Forfeiture after re-issue (per share) × No. of shares re-issued
	= Re 3 × 100
	=  ` 300

Question 67:

The Directors of a company forfeited 300 shares of  `10 each issued at a premium of  ` 3 per share , for the non-payment of the first call money of  ` 2 per share . The final call of  `2 per share has not been made. Half the forfeited shares were reissued at  `1,500 as fully paid-up. Record the journal entries for the forfeiture and reissue of shares.

Answer:

Journal Entries
Date	Particulars		L.F.	Debit `	Credit `
	Share Capital A/c (300 × 8)	Dr.		2,400
	To Share Forfeiture A/c (300 × 6)				1,800
	To Calls-In-Arrears (300 × 2)				600
	(300 shares of  ` 10 each on which   ` 8 had called, forfeited for non-payment  ` 2 per share)
	Bank A/c	Dr.		1,500
	To Share Capital A/c				1,500
	(150 shares of  ` 10 each re-issued for the sum of  ` 1,500)
	Share Forfeiture A/c	Dr.		900
	To Capital Reserve A/c				900
	(Balance in Share Forfeiture Account of 150 re-issued shares, transferred to Capital Reserve)

 

Working Notes

 

Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture)	Cr.	6
Less: Share Forfeiture  (at the time of re-issue)	Dr.	NIL
Balance in Share Forfeiture after re-issue	Cr.	6	per share

Capital Reserve = Balance in Share Forfeiture after reissue (per share) × Number of Shares Reissued

=  ` 6 × 150

=  ` 900

 

Question 68:

X Ltd . forfeited 100 shares of  ` 10 each ( ` 8 called-up) issued at a premium of  ` 2 per share to Rahul, on which he had paid applications money of  ` 5 per share , for non-payment of allotment money of  ` 5 per share (including premium). Out of these, 70 shares were reissued to Sanjay as  ` 8 called-up for  ` 7 per share. Give necessary journal entries relating to forfeiture and reissue of shares.

Answer:

Books of X Limited Journal
Date	Particulars		L.F.	Debit `	Credit `
	Share Capital A/c (100 × 8)	Dr.		800
	Securities Premium A/c (100 × 2)	Dr.		200
	To Share Forfeiture A/c (100 × 5)				500
	To Calls-in-Arrears A/c (100 × 5)				500
	(100 shares of  ` 10 each,  ` 8 called-up with premium  ` 2 per share, forfeited for the non-payment of  ` 5 each including  ` 2 premium)
	Bank A/c	Dr.		490
	Share Forfeiture A/c	Dr.		70
	To Share Capital A/c				560
	(70 shares of  ` 10 each re-issued at  ` 7 per share,  ` 8 paid-up)
	Share Forfeiture A/c	Dr.		280
	To Capital Reserve A/c				280
	(Balance of 70 shares re-issued shares in Share Forfeiture Account transferred to Capital Reserve)

 

Working Note-

 

Share Forfeiture Credit	5	per share
Less: Share Forfeiture Debit	1	per share
Balance in Share Forfeiture of re-issued shares	4	per share

Capital Reserve = Balance in Share Forfeiture Account of re-issued shares × No. of shares re-issued

= 70 × 4

=  ` 280

 

Question 69:

150 shares of  ` 10 each issued at a premium of  ` 4 per share payable with allotment were forfeited for non-payment of allotment money of  ` 8 per share including premium. The first and final call of  ` 4 per Pass Journal entries in the books of X Ltd. for the above. 

Answer:

Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Share Capital A/c	Dr.		900
	Securities Premium A/c	Dr.		600
	To Share Allotment A/c				1,200
	To Share Forfeiture A/c				300
	(150 shares of  ` 10 each forfeited for non–payment of allotment money of  ` 8 per share including premium of  ` 4 per share)
	Bank A/c	Dr.		2,250
	To Share Capital A/c				1,500
	To Securities Premium A/c				750
	(150 shares of  ` 10 each reissued for  ` 15 per share fully paid–up)
	Share Forfeiture A/c	Dr.		300
	To Capital Reserve A/c				300
	(Balance of Share Forfeiture Account transferred to Capital Reserve Account)

 

Question 70:

JCV Ltd., forfeited 200 shares of  ` 10 each issued at a premium of  ` 2 per share for the non-payment of allotment money of  ` 3 per share (including premium). The first and final call of   ` 4 per share has not been made as yet . 50% of the forfeited shares were reissued at  ` 8 per share  as fully paid-up . Pass necessary Journal entries for the forfeiture and reissue of shares.

Answer:

Application	`	5
Allotment	`	3	(1+2)
First and Final Call	`	4
		12	(10+2)

 

Called-up = Application + Allotment

=  ` 5 + 3 (including premium  ` 2)

 

Book of JCV Limited Journal
Date	Particulars		L.F.	Debit `	Credit `
	Share Capital A/c (200×6)	Dr.		1,200
	Securities Premium A/c (200×2)	Dr.		400
	To Share Forfeiture A/c (200×5)				1,000
	To Calls-in-Arrears A/c (200×3)				600
	(200 shares of  ` 10 each on which  ` 8  had called (including  ` 2 premium), forfeited for the non-payment of allotment  ` 3 (including  ` 2 premium)
	Bank A/c	Dr.		800
	Share Forfeiture A/c	Dr.		200
	To Share Capital A/c				1,000
	(100 shares of  ` 10 each re-issued at  ` 8 per share fully paid-up)
	Share Forfeiture A/c	Dr.		300
	To Capital Reserve				300
	(Amount of share forfeiture of 100 re-issued shares transferred to Capital Reserve)

 

Working Note

 

Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture)	Cr.	5
Share Forfeiture (at the time of re-issue)	Dr.	2
Balance in Share Forfeiter (after re-issue)	Cr.	3	per share

Capital Reserve

= Amount of share forfeitureTotal shares forfeited×Shares reissued - Loss on reissue of forfeited shares=1000200×100-100×2 =500-200=300

 

Question 71:

Pass necessary journal entries in the books of the company for the following transactions:
Vishesh Ltd. forfeited 1,000 Equity Shares of  ` 10 each issued at a premium of  ` 2 per share for non-payment of allotment money of  ` 5 per share including premium. The final call of  ` 2 per share was not yet called on these shares. Of the forfeited shares 800 shares were reissued at  ` 12 per share as fully paid-up.
The remaining shares were reissued at  ` 11 per share fully paid-up.

Answer:

 

Journal In the books of Vishesh Ltd.
Date	Particulars		L.F.	Debit `	Credit  `
	Equity Share Capital A/c (8×1,000)	Dr.		8,000
	Securities Premium A/c (2×1,000)	Dr.		2,000
	To Share Forfeiture A/c				5,000
	To Calls-in-Arrears				5,000
	(1,000 shares of  ` 10 each issued at premium of  ` 2 forfeited for non-payment of allotment money of  ` 5 including premium, final call of  ` 2 not yet made)
	Bank A/c (12×800)	Dr.		9,600
	To Share Capital A/c				8,000
	To Securities Premium A/c				1,600
	(800 shares reissued at  ` 12 fully paid up)
	Bank A/c (11×200)	Dr.		2,200
	To Share Capital A/c				2,000
	To Securities Premium A/c				200
	(200 shares reissued at  ` 11 fully paid up)
	Share Forfeiture A/c	Dr.		5,000
	To Capital Reserve A/c				5,000
	(Profit on reissue transferred to capital reserve)

 

Question 72:

Gaurav applied for 5,000 shares of  ` 10 each at a premium of 2.50 per share. But he was allotted only 2,500 shares on pro rata basis . After having paid  ` 3 per share on application, he did not pay allotment money of  ` 4.50 per share (including premium) and on his subsequent failure to pay the first call of  ` 2 per share, his shares were forfeited. These shares were reissued at the rate of  ` 8 per share credited as fully paid .
Pass journal entries to record the forfeiture and reissue of shares.

Answer:

Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Equity Share Capital A/c (2,500×7)	Dr.		17,500
	Security Premium Reserve A/c	Dr.		3,750
	To Equity Share Allotment A/c				3,750
	To  Equity Share First Call A/c (2,500×2)				5,000
	To Share Forfeited A/c				12,500
	( 2,500 shares forfeited)
	Bank A/c (2,500×8)	Dr.		20,000
	Share Forfeited A/c (2,500×2)	Dr.		5,000
	To Equity Share Capital A/c (2,500×10)				25,000
	(Share reissued @ ` 8 per share fully paid-up)
	Share Forfeited A/c (12,500 – 5,000)	Dr.		7,500
	To Capital Reserve A/c				7,500
	( Profit on reissue transferred to Capital Reserve)

 

Working Notes:

WN 1: Calculation of Amount unpaid on Allotment

Amount received on application (5,000×3)      = 15,000

Less: Amount adjusted on application (2,500×3) =  7,500

Excess amount received on application            =  7,500

 

Amount due on allotment (2,500×4.5) = 11,250

Amount unpaid on allotment           = 3,750 (11,250 – 7,500)