Question

Ratan Ltd. forfeited 3,000 shares of ₹ 10 each (issued at ₹ 2 premium) for non-payment of first call of ₹ 2 per share. Final call of ₹ 3 per share was not yet made. Out of these, 2,000 shares were reissued at ₹ 10 per share as fully paid. Pass entries for forfeiture and reissue of shares.

Answer 1

Journal Entries in the Books of Ratan Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		21,000
	To Shares First Call A/c			6,000
	To Forfeited Shares A/c			15,000
	(3,000 shares forfeited for non-payment of First Call of ₹ 2 per share)
2.	Bank A/c   ...Dr.		20,000
	To Share Capital A/c			20,000
	(2,000 forfeited shares reissued at ₹ 10 per share as fully paid-up)
3.	Forfeited Shares A/c   ...Dr.		10,000
	To Capital Reserve A/c			10,000
	(Profit on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 10

Premium per share: ₹ 2

First Call unpaid: ₹ 2 per share

Final Call not yet made: ₹ 3 per share

Since Final Call of ₹ 3 was not yet made, called-up Share Capital per share:

₹ 10 − ₹ 3 = ₹ 7

Amount received towards Share Capital per share:

₹ 7 − ₹ 2 = ₹ 5

Amount credited to Forfeited Shares A/c:

3,000 × ₹ 5 = ₹ 15,000

First Call unpaid:

3,000 × ₹ 2 = ₹ 6,000​