Question

A company forfeited 4,000 shares of ₹ 10 each fully called-up, on which application money of ₹ 3 each has been paid. Out of these, 2,000 shares were reissued as fully paid-up for ₹ 18,000.

Pass necessary Journal entries for above transactions.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		40,000
	To Calls-in-Arrears A/c			28,000
	To Forfeited Shares A/c			12,000
	(4,000 shares forfeited on which only application money of ₹ 3 per share was paid)
2.	Bank A/c   ...Dr.		18,000
	Forfeited Shares A/c   ...Dr.		2,000
	To Share Capital A/c			20,000
	(2,000 forfeited shares reissued as fully paid-up for ₹ 18,000)
3.	Forfeited Shares A/c   ...Dr.		4,000
	To Capital Reserve A/c			4,000
	(Gain on reissue transferred to Capital Reserve)

Working Note:

1. Amount forfeited:

Application money received:

4,000 × ₹ 3 = ₹ 12,000

Unpaid amount:

4,000 × (₹ 10 − ₹ 3) = ₹ 28,000

2. Reissue of 2,000 shares:

Amount received:

₹ 18,000

Share Capital credited:

2,000 × ₹ 10 = ₹ 20,000

Discount on reissue:

₹ 20,000 − ₹ 18,000 = ₹ 2,000

3. Forfeited amount relating to 2,000 shares reissued:

`12,000 xx (2,000)/(4,000)= 6,000`

Capital Reserve:

₹ 6,000 − ₹ 2,000 = ₹ 4,000