Question

Z Ltd. forfeited 1,200 shares of ₹100 each, issued at a premium of 30% to Dinesh on which he had paid application money of ₹50 per share and allotment money of ₹50 per share (inclucling premium), for non-payment of a first call of ₹10 per share. Out of these, 500 shares were re-issued as fully paid at the maximum rate of discount allowed by law.

Answer 1

Journal entries In the books of Z Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c     ...Dr.		96,000
	To Share First Call A/c			12,000
	To Share Forfeiture A/c			84,000
	(Being 1,200 shares forfeited for non-payment of first call of ₹10 per share. Amount received ₹70 per share)
2.	Bank A/c     ...Dr.		15,000
	Share Forfeiture A/c     ...Dr.		35,000
	To Share Capital A/c			50,000
	(Being 500 shares re-issued as fully paid at a discount of ₹70 per share, which is the maximum allowed)

Working Note:

1) Amount forfeited per share = ₹70 (₹50 application + ₹20 allotment)

2) Capital Reserve = ₹35,000 – ₹35,000 = ₹0