Question

A Ltd. forfeited 400 shares of Mr. X who had applied for 600 shares on account of non-payment of allotment, first call and final call. Shares were issued at ₹2 premium payable as follows:
On Application ₹3, on Allotment ₹3 + 2, on First call ₹2 and Final Call ₹2. Out of these, 300 shares were re-issued to Mr. Y at the rate of ₹12 per share as fully paid shares. Give journal entries in the books of company to record above transactions.

Answer 1

Journal entries In the books of A Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Equity Share Capital A/c     ...Dr.		2,800
	Securities Premium Reserve A/c     ...Dr.		800
	To Share Allotment A/c (400 × 3 + 2)			2,000
	To Share First Call A/c (400 × 2)			800
	To Share Final Call A/c (400 × 2)			800
	To Share Forfeiture A/c			1,000
	(Being forfeiture of 400 shares for non-payment of allotment incl. premium, first call and final call)
2.	Bank A/c     ...Dr.		3,600
	To Equity Share Capital A/c (300 × 10)			3,000
	To Securities Premium Reserve A/c (300 × 2)			600
	(Being 300 forfeited shares re-issued at ₹12 per share fully paid, i.e., at ₹2 premium)
3.	Share Forfeiture A/c     ...Dr.		1,350
	To Capital Reserve A/c			1,350
	(Being balance of Share Forfeiture transferred to Capital Reserve after re-issue)

Working Note:

1) Mr. X (400 shares forfeited, applied 600 → got 400 pro-rata)
Paid only Application = 400 × ₹3 = ₹1,200.
Allotment (₹5), First Call (₹2), Final Call (₹2) unpaid.
Total called up = ₹12/share × 400 = ₹4,800.
₹1,200 → goes to Share Forfeiture A/c.
(allotment 2,000 incl. premium + calls 1,600) = ₹3,600.

2) Forfeiture Amount
Share Capital called up = 400 × ₹10 = ₹4,000 (dr).
Premium unpaid = 400 × ₹2 = ₹800 (dr).
Credit to Calls in Arrears = ₹3,600.
Balance (amount received) = ₹1,000 → Share Forfeiture A/c.