Question

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

Sanya Ltd. forfeited 2,000 shares of ₹ 10 each, issued at a premium of ₹ 2 per share, ₹ 8 called up, for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 700 shares were reissued to Dev as ₹ 8 paid up for ₹ 10 per share.-

Answer 1

Journal Entries in the books of Sanya Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Equity Share Capital A/c   ...Dr.		16,000	-
	Securities Premium A/c   ...Dr.		4,000	-
	To Equity Share Allotment A/c		-	10,000
	To Share Forfeiture A/c		-	10,000
	(Being 2,000 shares forfeited for non-payment of allotment)
2.	Bank A/c   ...A/c		7,000	-
	To Equity Share Capital A/c		-	5,600
	To Securities Premium A/c		-	1,400
	(Being 700 shares reissued at ₹ 10 as ₹ 8 paid up)
3.	Share Forfeiture A/c   ...Dr.		3,500	-
	To Capital Reserve A/c		-	3,500
	(Being gained on reissue transferred to Capital Reserve)

Working Note:

Face Value: ₹ 10

Called-up Value (Face) ₹ 8

Securities Premium = ₹ 2

Unpaid Allotment = Face + Premium

= ₹ 3 + ₹ 2

= ₹ 5

Paid-up (Application) = called − unpaid allotment face value

= ₹ 8 − ₹ 3

= ₹ 5

Calculation of Capital Reserve:

Forfeited amount per share = `(10,000)/(2,000)`

= ₹ 5 per share

Forfeited amount on reissued shares = 700 shares × 5

= 3,500