Question

Show the forfeiture and reissue entries under the following case:

Light Ltd. forfeited 250 shares of ₹ 10 each, fully called-up, held by Chetan for non-payment of allotment money of ₹ 3 per share and first and final call money of ₹ 4 per share. These shares were reissued @ ₹ 8 per share as fully paid-up to Prem.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		2,500
	To Shares Allotment A/c			750
	To Shares First and Final Call A/c			1,000
	To Share Forfeiture A/c			750
	(250 shares forfeited for non-payment of allotment and First and Final Call)
2.	Bank A/c   ...Dr.		2,000
	Share Forfeiture A/c   ...Dr.		500
	To Share Capital A/c			2,500
	(250 forfeited shares reissued @ ₹ 8 per share as fully paid-up)
3.	Share Forfeiture A/c   ...Dr.		250
	To Capital Reserve A/c			250
	(Gain on reissue transferred to Capital Reserve)

Working Note:

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

Allotment unpaid = ₹ 3 per share

First and Final Call unpaid = ₹ 4 per share

Amount received per share:

₹ 10 − ₹ 3 − ₹ 4 = ₹ 3

Amount forfeited:

250 × ₹ 3 = ₹ 750

Shares were reissued @ ₹ 8 per share as fully paid-up.

Discount on reissue:

250 × (₹ 10 − ₹ 8) = 250 × ₹ 2 = ₹ 500

Capital Reserve:

₹ 750 − ₹ 500 = ₹ 250​