Question

150 shares of ₹ 10 each issued at a premium of ₹ 4 per share payable with allotment were forfeited for non-payment of allotment money of ₹ 8 per share including premium. The first and final call of ₹ 4 per share was not made. The forfeited shares were reissued at ₹ 15 per share fully paid-up.

Pass Journal entries in the books of X Ltd. for the above.

Answer 1

Journal Entries in the Books of X Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		900
	Securities Premium A/c   ...Dr.		600
	To Shares Allotment A/c			1,200
	To Share Forfeiture A/c			300
	(150 shares forfeited for non-payment of allotment money including premium)
2.	Bank A/c   ...Dr.		2,250
	To Share Capital A/c			1,500
	To Securities Premium A/c			750
	(150 forfeited shares reissued @ ₹ 15 per share as fully paid-up)
3.	Share Forfeiture A/c   ...Dr.		300
	To Capital Reserve A/c			300
	(Gain on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 10

Premium per share: ₹ 4

Allotment money = ₹ 8 per share, including premium ₹ 4.

Therefore, capital portion of allotment:

₹ 8 − ₹ 4 = ₹ 4

First and Final Call of ₹ 4 per share was not made.

Hence, called-up capital per share:

₹ 10 − ₹ 4 = ₹ 6

Amount received on application:

₹ 6 − ₹ 4 = ₹ 2 per share

1. Forfeiture of 150 Shares

Share Capital called-up:

150 × ₹ 6 = ₹ 900

Securities Premium not received:

150 × ₹ 4 = ₹ 600

Allotment money unpaid:

150 × ₹ 8 = ₹ 1,200

Amount received and forfeited:

150 × ₹ 2 = ₹ 300

2. Reissue of Shares

150 shares reissued @ ₹ 15 per share as fully paid-up:

150 × ₹ 15 = ₹ 2,250

Share Capital:

150 × ₹ 10 = ₹ 1,500

Securities Premium on reissue:

₹ 2,250 − ₹ 1,500 = ₹ 750

Since the shares are reissued at a premium, there is no discount on reissue. Therefore, the entire forfeited amount is transferred to Capital Reserve:

₹ 300