Question

Slow & Steady Ltd. invited  applications for 10,000 Equity Shares of ₹ 10 each for public subscription. The amount of these shares was payable as:
On application ₹ 1 per share, on allotment ₹ 2 per share, on first call ₹ 3 per share and on second and final call ₹ 4 per share.
All sums payable on application, allotment and calls were duly received with the following exceptions: 
(i)   A, who held 200 shares, failed to pay the money on allotments and calls.
(ii)  B, to whom 150 shares were allotted, failed to pay the money on first call and final call.
(iii) C, who held 50 shares, did not pay the amount of second and final call.
The shares of A, B and C were forfeited and were subsequently reissued for cash as fully paid-up at a discount of 5%.
Pass necessary Journal entries to record these transactions in the books of X Ltd. 

Answer 1

Issued and Applied 10,000 Shares of ₹ 10 each

					A		B		C		Paid-up Shares
Application	₹	1	(10,000							=	10,000)
Allotment	₹	2	(10,000	–	200					=	9,800)
First Call	₹	3	(10,000	–	200	–	150			=	9,650)
Second and Final Call	₹	4	(10,000	–	200	–	150	–	50	=	9,600)
		10

Books of Slow and Steady Limited 
Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Bank A/c	Dr.		10,000
	To Equity Share Application A/c				10,000
	(Share application received for 10,000 shares at ₹ 1 each)
	Equity Share Application A/c	Dr.		10,000
	To Equity Share Capital A/c				10,000
	(Share application money transferred to Share Capital)
	Equity Share Allotment A/c	Dr.		20,000
	To Equity Share Capital A/c				20,000
	(Share allotment due on 10,000 shares at ₹ 2 each)
	Bank A/c	Dr.		19,600
	Calls-In-Arrears A/c	Dr.		400
	To Equity Share Allotment A/c				20,000
	(Share allotment of ₹ 2 per share received on 9,800 shares and holder of 200 failed to pay to it)
	Equity Share First Call A/c	Dr.		30,000
	To Equity Share Capital				30,000
	(Share first call due on 10,000 shares at ₹ 3 each)
	Bank A/c	Dr.		28,950
	Calls-In-Arrears A/c	Dr.		1,050
	To Equity Shares First Call A/c				30,000
	(Share first call received on 9,650 shares and holders of 350 shares failed to pay it)
	Equity Share Final Call A/c	Dr.		40,000
	To Equity Share Capital A/c				40,000
	(Share final call due on 10,000 shares at ₹ 4 each)
	Bank A/c	Dr.		38,400
	Calls-In-Arrears A/c	Dr.		1,600
	To Equity Share Final Call A/c				40,000
	(Holders of 9,600 shares paid final call and holders of 400 shares failed to pay it)
	Equity Share Capital A/c	Dr.		2,000
	To Share Forfeiture A/c (200 × 1)				200
	To Calls-In-Arrears A/c (200 × 9)				1,800
	(200 shares held by A on which application money ₹ 1 was received, forfeited)
	Equity Share Capital A/c	Dr.		1,500
	To Share Forfeiture A/c (150 × 3)				450
	To Calls-In-Arrears A/c (150 × 7)				1,050
	(150 shares of ₹ 10 each held by B forfeited for the non-payment of two calls ₹ each)
	Equity Share Capital A/c	Dr.		500
	To Share Forfeiture A/c (50 × 6)				300
	To Calls-in-Arrears A/c (50 × 4)				200
	(50 shares of ₹ 10 each held by C forfeited for the non-payment of final call ₹ 4 each)
	Bank A/c (400 × 9.5)	Dr.		3,800
	Share Forfeiture A/c (400 × .5)	Dr.		200
	To Equity Share Capital A/c				4,000
	(400 shares of ₹ 10 each re-issued at ₹ 9.5 per share as fully paid-up)
	Share Forfeiture A/c	Dr.		750
	To Capital Reserve A/c				750
	(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

Working Note:

Share Forfeiture of 100 shares held by A	₹	200	Cr.
Share Forfeiture of 200 shares held by B	₹	450	Cr.
Share Forfeiture of 300 shares held by C	₹	300	Cr.
Total Share Forfeiture credit (at the time of cancellation of shares)	₹	950

Calculation of Capital Reserve

Total Share Forfeiture (at the time of cancellation of shares) =                 ₹ 950

Less: Total Share Forfeiture (at the time of re-issue of shares) =                ₹ (200)

Capital Reserve = ₹ 750