Question

Healthy Foods Ltd. had authorised capital of ₹ 50,00,000, 5,00,000 equity shares of ₹ 10 each issued 3,75,000 equity shares for subscription at a premium of 20% payable ₹ 4 on application, ₹ 5 on allotment and balance as first and final call. The shares were subscribed, and due amounts were received except allotment money on 25,000 shares. These shares were forfeited, Later these shares were reissued at ₹ 7 paid-up and ₹ 50,000 were transferred to Capital Reserve. First and final call was demanded from the shareholders and was received except on 10,000 which was transferred to Calls-in-Arrears Account.

Pass the Journal entries for forfeiture, reissue of forfeited shares and first and final call.

Answer 1

Journal Entries in the Books of Healthy Foods Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		2,50,000
	Securities Premium A/c   ...Dr.		50,000
	To Shares Allotment A/c			1,25,000
	To Share Forfeiture A/c			1,75,000
	(25,000 shares forfeited for non-payment of allotment money including premium)
2.	Bank A/c   ...Dr.		1,75,000
	To Share Capital A/c			1,75,000
	(25,000 forfeited shares reissued as ₹ 7 paid-up at ₹ 7 per share)
3.	Share Forfeiture A/c   ...Dr.		50,000
	To Capital Reserve A/c			50,000
	(Gain on reissue transferred to Capital Reserve)
4.	Share First and Final Call A/c   ...Dr.		10,50,000
	To Share Capital A/c			10,50,000
	(First and Final Call due on 3,50,000 shares @ ₹ 3 per share)
5.	Bank A/c   ...Dr.		10,20,000
	Calls-in-Arrears A/c   ...Dr.		30,000
	To Share First and Final Call A/c			10,50,000
	(First and Final Call received except on 10,000 shares)

Working Note:

Face value per share: ₹ 10

Premium: 20% of ₹ 10 = ₹ 2

Amount payable:

Application: ₹ 4

Allotment: ₹ 5 (including premium ₹ 2)

First and Final Call:

₹ 12 − ₹ 4 − ₹ 5 = ₹ 3

Shares issued and subscribed = 3,75,000 shares

1. Forfeiture of 25,000 Shares

Allotment money not received:

25,000 × ₹ 5 = ₹ 1,25,000

Premium not received:

25,000 × ₹ 2 = ₹50,000

Called-up capital:

25,000 × (₹ 10) = ₹ 2,50,000

Amount received towards capital:

Application:

25,000 × ₹ 4 = ₹ 1,00,000

Allotment capital portion:

25,000 × (₹ 5 − ₹ 2) = ₹ 75,000

Total forfeited amount:

₹ 1,00,000 + ₹ 75,000 = ₹ 1,75,000

2. Reissue of Forfeited Shares

Shares reissued = 25,000 shares

Reissued as ₹ 7 paid-up at ₹ 7 per share.

Cash received:

25,000 × ₹ 7 = ₹ 1,75,000

Share Capital credited:

25,000 × ₹ 7 = ₹ 1,75,000

Forfeited amount transferred to Capital Reserve:

Given:

₹ 50,000

3. First and Final Call

Call due on remaining shares:

3,75,000 − 25,000 = 3,50,000 shares

First and Final Call:

3,50,000 × ₹ 3 = ₹ 10,50,000

Calls-in-Arrears on 10,000 shares:

10,000 × ₹ 3 = ₹ 30,000

Amount received:

₹ 10,50,000 − ₹ 30,000 = ₹ 10,20,000​