Question

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

Vipin Ltd. forfeited 10,000 shares of ₹ 10 each issued at a premium of ₹ 1 per share, for non- payment of second and final call of ₹ 2 per share. Out of these, 60% of the shares were reissued ₹ 7 per share fully paid-up. 

Answer 1

In the Books of Vipin Ltd. Journal
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (10,000 × ₹10)       ...Dr.		1,00,000
	To Share Second & Final Call A/c (10,000 × ₹2)			20,000
	To Share Forfeiture A/c			80,000
	(Being 10,000 shares forfeited for non-payment of second and final call money)
2.	Bank A/c (6,000 × ₹7)       ...Dr.		42,000
	Share Forfeiture A/c (6,000 × ₹ 3)     ...Dr.		18,000
	To Share Capital A/c (6,000 × ₹ 10)			60,000
	(Being 6,000 forfeited shares reissued at  ₹ 7 per share fully paid - up)
3.	Share Forfeiture A/c     ...Dr.		30,000
	To Capital Reserve A/c			30,000
	(Being profit on reissue of 6,000 forfeited shares transferred to Capital Reserve Account)

Working Note:

Profit on 10,000 shares = ₹ 80,000

Profit on 6,000 shares = ` ₹ 80,000 xx (6,000)/(10,000)`

= ₹ 48,000

Loss on Reissue of 6,000 shares = 6,000 × ₹ 3 = ₹ 18,000

Profit on Reissue of shares transferred to Capital Reserve = ₹ 48,000 - ₹ 18,000

= ₹ 30,000