Question

Y Ltd. forfeited 100 shares of ₹10 each issued at 20% premium (to be paid at the time of allotment) on which first call money of ₹3 was not received; the final call money of ₹2 is not yet called. These shares were subsequently re-issued at ₹7 per share as ₹8 paid-up. Give necessary journal entries regarding forfeiture and re-issue of shares.

Answer 1

Journal entries In the books of Y Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (₹8 × 100)     ...Dr.		800
	Securities Premium A/c (₹2 × 100)     ...Dr.		200
	To Share First Call A/c (₹3 × 100)			300
	To Share Forfeiture A/c			500
	(Being 100 shares forfeited for non-payment of first call, final call not yet made)
2.	Bank A/c (₹7 × 100)     ...Dr.		700
	Share Forfeiture A/c (₹1 × 100)     ...Dr.		100
	To Share Capital A/c (₹8 × 100)			800
	(Being 100 shares reissued at ₹7 each as ₹8 paid-up)
3.	Share Forfeiture A/c     ...Dr.		400
	To Capital Reserve A/c			400
	(Being balance in forfeiture transferred to Capital Reserve)

Working Note:

1)

	Amount (₹)
Application	₹3
Allotment	₹5 (₹3 capital + ₹2 premium)
First Call	₹3
Final Call	₹2 (Not Called Yet)

Total Called-up = ₹3 + ₹3 + ₹2 (premium) + ₹3 = ₹8 (excluding final call)

2) 

Particulars	Amount (₹)
Amount Called-up	₹8
Amount Unpaid (First Call)	₹3
Amount Paid	₹5
→ Application	₹3
→ Allotment (Capital + Premium)	₹2 + ₹2 = ₹4 (but ₹3 capital only in capital A/c)

Total shares = 100
otal forfeiture amount = ₹5 × 100 = ₹500

3) Capital Profit = Forfeiture - Discount = ₹500 - ₹100 = ₹400 → Capital Reserve