Question

Pass necessary journal entries for the forfeiture and reissue of forfeited shares in the following case:

Diksha Ltd. forfeited 3,000 shares of ₹ 10 each for non-payment of the final call of ₹ 2 per share. Out of these, 600 shares were reissued as fully paid up in such a way that ₹ 4,200 was transferred to the capital reserve.

Answer 1

Journal Entries in the Books of Diksha Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c ... Dr. (3,000 × 10)		30,000	-
	To Share Final Call A/c (3,000 × 2)		-	6,000
	To Share Forfeiture A/c (3,000 × 8)		-	24,000
	(Being 3,000 shares forfeited for non-payment of final call)
2.	Bank A/c ... Dr. (600 × 8)		5,400	-
	Share Forfeiture A/c ... Dr. (600 × 1)		600	-
	To Share Capital A/c (600 × 10)		-	6,000
	(Being 600 shares reissued @ ₹ 9 per share as fully paid up)
3.	Share Forfeiture A/c ... Dr.		4,200	-
	To Capital Reserve A/c		-	4,200
	(Being gained on reissue of 600 shares transferred to Capital Reserve)

Working Notes:

1. Forfeiture Amount:

Paid-up amount per share (to be forfeited) = Face Value per share − Unpaid Final Call

= ₹ 10 − ₹ 2

= ₹ 8 per share

2. Capital Reserve Calculation (for 600 shares):

Total Forfeited amount for 600 shares = 600 × 8

= 4,800

Amount transferred to Capital Reserve = ₹ 4,200

Discount allowed on reissue = Total Forfeited Amount − Capital Reserve

Discount = 4,800 − 4,200

= 600

3. Reissue Price:

Discount per share = 600 ÷ 600

= 1 per share

Reissue Price = Face Value − Discount

= 10 − 1

= 9 per share