Question

Y Ltd. invited applications for issuing 15,000 equity shares of ₹10 each on which ₹6 per share were called up, which were payable as follows:

On application	₹2 per share
On allotment	₹1 per share
On first call	₹3 per share

The issue was fully subscribed and the amount was received as follows:

On 10,000 shares	₹6 per share
On 3,000 shares	₹3 per share
On 2,000 shares	₹2 per share

The directors forfeited those shares on which less than ₹6 per share were received. The forfeited shares were re-issued at ₹9 per: share, as ₹6 per share paid up.
Pass necessary journal entries for the above transactions in the books of the company.

Answer 1

Journal entries  In the books of Y Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c     ...Dr.		30,000
	To Share Application A/c			30,000
	(Application money received: 15,000 × ₹2)
2.	Share Application A/c     ...Dr.		30,000
	To Share Capital A/c			30,000
	(Application transferred to Share Capital)
3.	Share Allotment A/c     ...Dr.		15,000
	To Share Capital A/c			15,000
	(Allotment due: 15,000 × ₹1)
4.	Bank A/c     ...Dr.		13,000
	Calls in Arrears A/c     ...Dr.		2,000
	To Share Allotment A/c			15,000
	(Allotment received; 2,000 shares unpaid)
5.	Share First Call A/c     ...Dr.		45,000
	To Share Capital A/c			45,000
	(First call due: 15,000 × ₹3)
6.	Bank A/c     ...Dr.		30,000
	Calls in Arrears A/c     ...Dr.		15,000
	To Share First Call A/c			45,000
	(First call received; 5,000 shares unpaid on call)
7.	Share Capital A/c     ...Dr.		30,000
	To Calls in Arrears A/c			17,000
	To Share Forfeiture A/c			13,000
	(Forfeiture of 5,000 shares on which < ₹6 received)
8.	Bank A/c     ...Dr.		45,000
	To Share Capital A/c			30,000
	To Securities Premium Reserve A/c			15,000
	(Re-issue of all 5,000 forfeited shares @ ₹9, ₹6 paid-up, i.e., ₹3 premium)
9.	Share Forfeiture A/c     ...Dr.		13,000
	To Capital Reserve A/c			13,000
	(Surplus on re-issue transferred to Capital Reserve)

Working note:

Forfeiture:
5,000 shares (those with <₹6 received)
Capital Dr = 5,000 × ₹6 = ₹30,000
Calls-in-arrears Cr = (3,000 × ₹3) + (2,000 × ₹4) = ₹17,000
Share Forfeiture Cr = amounts actually received on these shares = (3,000 × ₹3) + (2,000 × ₹2) = ₹13,000.