Question

Lily Ltd. forfeited 2,000 equity shares of ₹ 10 each for non-payment of first and final call of ₹ 2 per share. 750 of the forfeited shares were reissued to Ashok for ₹ 10,000 as fully paid-up. The remaining shares were reissued to Sudha at ₹ 9 per share fully paid-up.

Pass necessary journal entries for the above transactions in the books of Lily Ltd.

Answer 1

Journal Entries In the books of Lily Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c   ...Dr.		20,000
	To Share Forfeiture A/c			16,000
	To First & Final Call A/c			4,000
	(Being 2,000 shares forfeited due to non-payment of call)
2.	Bank A/c   ...Dr.		10,000
	To Share Capital A/c			7,500
	To Securities Premium A/c			2,500
	(Being 750 shares that were forfeited and reissued at ₹ 10 each)
3.	Bank A/c   ...Dr.		11,250
	Share Forfeiture A/c   ...Dr.		1,250
	To Share Capital A/c			12,500
	(Being Reissuing 1,250 forfeited shares at a price of ₹ 9 each)

Working Note:

1. On Shares reissued to Ashok (750 shares):

Amount forfeited (750 × ₹ 8) = ₹ 6,000

Less: Discount on reissue = Nil

Profit = ₹ 6,000

2. On Shares reissued to Sudha (1,250 shares):

Amount forfeited (1,250 × ₹ 8) = ₹ 10,000

Less: Discount on reissue (1,250 × ₹ 1) = ₹ 1,250

Profit = ₹ 8,750

Total Transfer to Capital Reserve = ₹ 6,000 + ₹ 8,750 = ₹ 14,750