Question

Give journal entries for forfeiture and re-issue of shares:

X Ltd. forfeited 300 shares of ₹100 each, ₹75 called-up, issued at 10% premium (to be paid at the time of allotment) for non-payment of allotment money of ₹30 per share (including premium) and first call of ₹20 per share. Out of these, 100 shares were re-issued as fully paid-up in such a way that ₹3,100 were transferred to Capital Reserve.

Answer 1

Journal entries In the books of X Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c     ...Dr.		22,500
	To Share Allotment A/c			9,000
	To Share First Call A/c			6,000
	To Share Forfeiture A/c			7,500
	(Being 300 shares forfeited for non-payment of allotment and first call)
2.	Bank A/c     ...Dr.		9,600
	Share Forfeiture A/c     ...Dr.		400
	To Share Capital A/c			10,000
	(Being 100 forfeited shares reissued at ₹96 as fully paid-up)
3.	Share Forfeiture A/c     ...Dr.		3,100
	To Capital Reserve A/c			3,100
	(Being gain on reissue of 100 shares transferred to Capital Reserve)

Working Notes:

1) Amount called-up on 300 shares = ₹75 × 300 = ₹22,500

2) Unpaid:
Allotment (₹30 × 300) = ₹9,000
First Call (₹20 × 300) = ₹6,000

3) Amount received = Application (₹25 × 300) = ₹7,500 → Share Forfeiture A/c

4) Reissue Discount = ₹100 (FV) – ₹96 = ₹4 × 100 shares = ₹400
Adjusted from Share Forfeiture A/c.

5) Capital Reserve = (₹25 Application + ₹10 Capital on Allotment) – ₹4 Discount = ₹31 × 100 = ₹3,100