Question

Om Solutions Ltd. forfeited 7,000 shares of ₹100 each issued at 20% premium for non-payment of allotment money of ₹55 (including premium). First and final call of ₹25 was not made. Out of these, 6,000 shares have been re-issued at ₹... per share as ₹75 paid up. An amount of ₹1,50,000 has been transferred to Capital Reserve.
Pass necessary entries to show the above transactions.

Answer 1

Journal entries  In the books of Om Solutions Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c     ...Dr.		5,25,000
	To Share Allotment A/c			2,45,000
	To Securities Premium A/c			1,40,000
	To Share Forfeiture A/c			2,80,000
	(Being 7,000 shares forfeited for non-payment of allotment including premium)
2.	Bank A/c     ...Dr.		3,60,000
	Share Forfeiture A/c     ...Dr.		90,000
	To Share Capital A/c			4,50,000
	(Being 6,000 shares reissued at ₹60 per share as ₹75 paid-up; discount of ₹15 per share adjusted from forfeiture)
3.	Share Forfeiture A/c     ...Dr.		1,50,000
	To Capital Reserve A/c			1,50,000
	(Being profit on reissue of 6,000 shares transferred to Capital Reserve)

Working Notes:

1) Called-up Amount at Forfeiture: 

• Application assumed received: ₹40 (since ₹120 – ₹55 allotment – ₹25 call = ₹40)
• Allotment not received: ₹55 (₹35 capital + ₹20 premium)
• First & Final Call: Not yet made So, amount called-up = ₹100 – ₹25 (not yet called) = ₹75

2) Forfeiture Calculation (for 7,000 shares):

• Share Capital A/c Dr.: ₹75 × 7,000 = ₹5,25,000
• Share Allotment A/c Cr. (Unpaid): ₹35 × 7,000 = ₹2,45,000
• Securities Premium A/c Cr.: ₹20 × 7,000 = ₹1,40,000
• Share Forfeiture A/c Cr. (Received): ₹40 × 7,000 = ₹2,80,000

3) Reissue of 6,000 shares:

• Reissued at ₹60 per share as ₹75 paid-up → Discount = ₹15 per share
• Discount = ₹15 × 6,000 = ₹90,000 → Adjusted from Share Forfeiture
• Amount received = ₹60 × 6,000 = ₹3,60,000
• Profit on reissue transferred to Capital Reserve = ₹1,50,000
• Amount used from forfeiture: ₹90,000 (discount) + ₹1,50,000 = ₹2,40,000