Question

Pass journal entries for the forfeiture and re-issue in the following case:

Y Ltd. forfeited 400 shares of ₹10 each, ₹6 called-up, for non-payment of first call of ₹2 per share. Out of these, 300 shares were immediately re-issued at ₹5 per share.

Answer 1

Journal entries In the books of Y Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (400 × ₹6)     ...Dr.		2,400
	To Calls in Arrears A/c (400 × ₹2)			800
	To Share Forfeiture A/c (400 × ₹4)			1,600
	(Being 400 shares forfeited for non-payment of ₹2 per share)
2.	Bank A/c (300 × ₹5)     ...Dr.		1,500
	Share Forfeiture A/c (300 × ₹5 discount)     ...Dr.		1,500
	To Share Capital A/c (300 × ₹10)			3,000
	(Being 300 shares reissued at ₹5 per share as fully paid)
4.	Share Forfeiture A/c     ...Dr.		900
	To Capital Reserve A/c			900
	(Being balance of share forfeiture on reissued shares transferred to Capital Reserve)

Working Note:

1) Forfeiture amount on 400 shares = 400 × ₹4 = ₹1,600

2) Reissued = 300 shares

3) Forfeiture received on 300 = 300 × ₹4 = ₹1,200

4) Discount on reissue = 300 × ₹5 = ₹1,500

5) Deficit = ₹300 adjusted from forfeiture

6) Balance left from forfeiture = ₹1,200 – ₹300 = ₹900 → Capital Reserve