Question

500 shares of ₹10 each, issued at a premium of ₹1 on which ₹8 (including premium 1) was called and ₹6 (including premium) was paid, have been forfeited. 400 of these shares were re-issued as fully paid in such a way that ₹800 were transferred to Capital Reserve. Journalise.

Answer 1

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (₹7 × 500)     ...Dr.		3,500
	To Calls in Arrears A/c (₹2 × 500)			1,000
	To Share Forfeiture A/c (₹5 × 500)			2,500
	(Being 500 shares forfeited for non-payment of ₹2 per share)
2.	Bank A/c     ...Dr.		2,800
	Share Forfeiture A/c     ...Dr.		1,200
	To Share Capital A/c			4,000
	(Being 400 shares re-issued as fully paid at a discount of ₹3 per share)
3.	Share Forfeiture A/c     ...Dr.		800
	To Capital Reserve A/c			800
	(Being profit on re-issue transferred to Capital Reserve)

Working note:

Re-issue of 400 shares as fully paid
Fully paid = ₹10 per share
Reissue price = ₹7 per share
Discount = ₹3 per share
Discount total = ₹3 × 400 = ₹1,200
₹7 × 400 = ₹2,800
Amount forfeited on 400 shares: ₹5 × 400 = ₹2,000
Amount used to write off discount: ₹1,200
Remaining profit: ₹2,000 – ₹1,200 = ₹800 → transferred to Capital Reserve