Question

Arushi Computers Ltd. issued 10,000 equity shares of Rs. 100 each at 10% premium. The net amount payable is as follows:

On application	Rs. 20
On allotment	Rs. 50 (Rs. 40 + premium Rs. 10)
On first call	Rs. 30
On final call	Rs. 10

A shareholder holding 200 shares did not pay the final call. His shares were forfeited. Out of these 150 shares were reissued to Ms. Sonia at Rs. 75 per share.

Give journal entries in the books of the company.

Answer 1

Journal Entries in the books of Arushi Computers Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		2,00,000	-
	To Share Application A/c		-	2,00,000
	(Share Application money received for 10,000 shares @ ₹ 20 per share)
2.	Share Application A/c   ...Dr.		2,00,000	-
	To Share Capital A/c		-	2,00,000
	(Share Application money for 10,000 shares transferred to Share Capital Account)
3.	Share Allotment A/c   ...Dr.		5,00,000	-
	To Share Capital A/c		-	4,00,000
	To Securities Premium Reserve A/c		-	1,00,000
	(Allotment money due on 10,000 shares @ ₹ 40 per share excluding premium ₹ 10)
4.	Bank A/c   ...Dr.		5,00,000	-
	To Share Allotment A/c		-	5,00,000
	(Share Allotment money received for 10,000 shares @ ₹ 50 per share)
5.	Share First Call A/c   ...Dr.		3,00,000	-
	To Share Capital A/c		-	3,00,000
	(Share First Call money due on 10,000 shares @ ₹ 30 per share)
6.	Bank A/c ...Dr.		3,00,000	-
	To Share First Call A/c		-	3,00,000
	(First Call money received for 10,000 shares @ ₹ 30 per share)
7.	Share Final Call A/c   ...Dr.		1,00,000	-
	To Share Capital A/c		-	1,00,000
	(Final Call money due on 10,000 shares @ ₹ 10 per share)
8.	Bank A/c   ...Dr.		98,000	-
	To Share final call A/c		-	98,000
	(Final Call money received for 9800 shares @ ₹ 10 per share, and 200 shares failed to pay)
9.	Share Capital A/c   ...Dr.		20,000	-
	To Share Final Call		-	2,000
	To Share Forfeiture A/c		-	18,000
	(200 shares forfeited for non-payment of Final Call ₹ 10 per share)
10.	Bank A/c   ...Dr.		11,250	-
	Share Forfeiture A/c ....Dr.		3,750	-
	To Share Capital A/c		-	15,000
	(150 forfeited shares reissued at ₹ 100 per share for ₹ 75)
11.	Share Forfeiture A/c   ...Dr.		9,750	-
	To Capital Reserve A/c		-	9,750
	(Balance of 150 reissue shares after adjustment transferred to Capital Reserve Account)

Working Notes:

Amount Received towards Capital (Forfeited) = 200 shares × (Rs. 20 Application + Rs. 40 Allotment Capital + Rs. 30 First Call)

Amount of share forfeiture on forfeited shares = 200 × ₹ 90

= ₹ 18,000

Profit on 150 shares = `(18,000/200 × 150)`

= ₹ 13,500

Money transferred to capital reserve = (13,500 – 3,750)

= ₹ 9,750