Question

Give journal entries for forfeiture and re-issue of shares:

X Ltd. forfeited 500 shares of ₹ 100 each, ₹ 75 called-up, issued at 10% premium (to be paid at the time of allotment) for non-payment of a first call of ₹ 20 per share. Out of these, 200 shares were re-issued as ₹ 75 paid-up for ₹ 60 per share.

Answer 1

Given:

500 shares of ₹ 100 each

₹75 called up (→ Application ₹ 25, Allotment ₹ 30 incl. ₹10 premium, First Call ₹ 20)

Non-payment of first call ₹ 20 → shares forfeited

Issued at 10% premium (premium received at allotment)

200 shares reissued at ₹ 60 per share, ₹ 75 paid-up

Journal Entries in the books of X Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c		37,500
	Securities Premium A/c		5,000
	To Share Forfeiture A/c			22,500
	To Share First Call A/c			10,000
	(Being shres has been forfeited)
2.	Bank A/c		12,000
	Share Forfeiture A/c		3,000
	To Share Capital A/c			15,000
	(Being a reissue of 200 shares)
3.	Share Forfeiture A/c		8,000
	To Capital Reserve A/c			8,000
	(Being transferred to Capital Reserve)

Working note:

1) Share Forfeiture (Amount received):

= ₹ 45 × 500 

= ₹ 22,500

2) Reissue

200 shares reissued at ₹ 60 per share, ₹ 75 paid-up.

Discount on reissue = ₹ 75 – ₹ 60

= ₹ 15 per share

Total discount = ₹ 15 × 200

= ₹ 3,000

3) Transfer to Capital Reserve

Profit on reissued shares = Amount forfeited on reissued shares – Discount allowed on reissue

Amount forfeited per share = ₹45

For 200 shares reissued, forfeited amount = 200 × 45

= ₹9,000

Discount allowed = ₹3,000

Profit on reissue = 9,000 − 3,000

= 6,000