Question

'Sagar Ltd.' forfeited 1,000 shares of ₹ 10 each for non-payment of first and final call of ₹ 2 per share. These shares were reissued and gain on reissue transferred to Capital Reserve was ₹ 5,000. Determine the amount realised from reissue of shares.

Answer 1

Journal Entry for Reissue
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		7,000
	Share Forfeiture A/c   ...Dr.		3,000
	To Share Capital A/c			10,000
	(1,000 forfeited shares reissued as fully paid-up)
2.	Share Forfeiture A/c   ...Dr.		5,000
	To Capital Reserve A/c			5,000
	(Gain on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 10

First and Final Call unpaid: ₹ 2 per share

Amount received and forfeited per share:

₹ 10 − ₹ 2 = ₹ 8

Forfeited amount on 1,000 shares:

1,000 × ₹ 8 = ₹ 8,000

Given gain transferred to Capital Reserve:

₹ 5,000

Therefore, discount allowed on reissue:

₹ 8,000 − ₹ 5,000 = ₹ 3,000

Share Capital credited on reissue:

1,000 × ₹ 10 = ₹ 10,000

Amount realised from reissue:

₹ 10,000 − ₹ 3,000 = ₹ 7,000