Question

Show the forfeiture and reissue entries under the following case:

KK Ltd. forfeited 400 shares of ₹ 10 each, fully called-up, held by Bhawna for non-payment of final call money of ₹ 4 per share. These shares were reissued to Tarun at ₹ 12 per share as fully paid-up.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c Dr.		4,000
	To Shares Final Call A/c			1,600
	To Share Forfeiture A/c			2,400
	(400 shares forfeited for non-payment of Final Call of ₹ 4 per share)
2.	Bank A/c Dr.		4,800
	To Share Capital A/c			4,000
	To Securities Premium A/c			800
	(400 forfeited shares reissued @ ₹ 12 per share as fully paid-up)
3.	Share Forfeiture A/c Dr.		2,400
	To Capital Reserve A/c			2,400
	(Gain on reissue transferred to Capital Reserve)

Working Note:

400 shares of ₹ 10 each were fully called-up.

Final Call unpaid = ₹ 4 per share.

Amount received per share:

₹ 10 − ₹ 4 = ₹ 6

Amount forfeited:

400 × ₹ 6 = ₹ 2,400

Shares were reissued @ ₹ 12 per share as fully paid-up.

Premium on reissue:

400 × (₹ 12 − ₹ 10) = ₹ 800

Since there is no discount on reissue, entire forfeited amount is transferred to Capital Reserve:

Capital Reserve = ₹ 2,400​