Question

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

Macil Ltd. forfeited 3,000 shares of ₹ 100 each issued at 20% premium for the non-payment of allotment money of ₹ 30 per share and first call of ₹ 40 per share (including premium ₹ 10). The second and final call of ₹ 30 per share (including a premium of ₹ 10) was not yet called. Out of these, 2,000 shares were reissued at ₹ 80 per share paid-up for ₹ 90 per share.

Answer 1

In the Books of Macil Ltd. Journal
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
i.	Share Capital A/c (3,000 × 80)   ...Dr.		2,40,000	−
	Securities Premium A/c (3,000 × 10)   ...Dr.		30,000	−
	To Share Allotment A/c (3,000 × 30)		−	90,000
	To Share First Call A/c (3,000 × 40)		−	1,20,000
	To Share Forfeiture A/c		−	60,000
	(Being forfeiture of 3,000 shares for non-payment of allotment and first Call money)
ii.	Bank A/c   ...Dr.		1,60,000	−
	Share Forfeiture A/с   ...Dr.		20,000	−
	To Share Capital A/c		−	1,80,000
	(Being 2,000 forfeited shares reissued at ₹ 80 per share, paid-up for ₹ 90 per share)
iii.	Share Forfeiture A/c   ...Dr.		20,000	−
	To Capital Reserve A/с		−	20,000
	(Being profit on reissue of 2,000 shares transferred to Capital Reserve Account)

Working Note:

Profit on 3,000 share = ₹ 60,000

∴ Profit on 2,000 shares = `60,000 xx 2000/3000`

= ₹ 40,000

Profit on reissue of 2,000 shares = ₹ 40,000 − ₹ 20,000

= ₹ 20,000