Question

Grofers Ltd. having authorised capital of ₹ 25,00,000, issued 2,00,000 equity shares of ₹ 10 each for subscription payable ₹ 4 on application, ₹ 3 on allotment and balance on first and final call. The shares were subscribed, and due amounts were received except first and final call on 4,000 shares held by Rana. These shares were forfeited. Later, half the shares were reissued as fully paid-up and ₹ 14,000 were transferred to Capital Reserve. Pass the Journal entry for forfeiture and reissue of shares.

Answer 1

Journal Entries in the Books of Grofers Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Equity Share Capital A/c Dr.		40,000
	To Equity Shares First and Final Call A/c			12,000
	To Forfeited Shares A/c			28,000
	(4,000 shares of Rana forfeited for non-payment of First and Final Call)
2.	Bank A/c Dr.		20,000
	To Equity Share Capital A/c			20,000
	(2,000 forfeited shares reissued at ₹10 per share as fully paid-up)
3.	Forfeited Shares A/c Dr.		14,000
	To Capital Reserve A/c			14,000
	(Gain on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 10

Amount payable:

Application: ₹ 4

Allotment: ₹ 3

First and Final Call:

₹ 10 − ₹ 4 − ₹ 3 = ₹ 3

Rana held 4,000 shares and failed to pay the First and Final Call.

1. Forfeiture of Rana's Shares

Amount called-up:

4,000 × ₹ 10 = ₹ 40,000

First and Final Call unpaid:

4,000 × ₹ 3 = ₹ 12,000

Amount received and forfeited:

4,000 × (₹ 4 + ₹ 3) = 4,000 × ₹ 7 = ₹ 28,000

2. Reissue of Shares

Half of the forfeited shares were reissued:

`4,000 xx 1/2 = 2,000` shares

Forfeited amount relating to 2,000 reissued shares:

`28,000 xx (2,000)/(4,000) = 14,000`

Given that ₹ 14,000 was transferred to Capital Reserve, there is no discount on reissue.

Therefore, shares were reissued at ₹ 10 per share:

2,000 × ₹ 10 = ₹ 20,000​