Question

Alfa Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made. The forfeited shares were reissued for ₹ 90 per share, ₹ 75 paid-up.

Journalise the above.

Answer 1

Journal Entries in the Books of Alfa Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		67,500
	To Shares Allotment A/c			27,000
	To Shares First Call A/c			18,000
	To Forfeited Shares A/c			22,500
	(900 shares forfeited for non-payment of allotment and First Call)
2.	Bank A/c   ...Dr.		81,000
	To Share Capital A/c			67,500
	To Securities Premium A/c			13,500
	(900 forfeited shares reissued @ ₹ 90 per share as ₹ 75 paid-up)
3.	Forfeited Shares A/c Dr.		22,500
	To Capital Reserve A/c			22,500
	(Gain on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 100

Second and Final Call not yet made: ₹ 25 per share

Therefore, called-up capital per share:

₹ 100 − ₹ 25 = ₹ 75

Amount unpaid per share:

Allotment = ₹ 30

First Call = ₹ 20

Therefore, amount received per share:

₹ 75 − ₹ 30 − ₹ 20 = ₹ 25

Amount credited to Forfeited Shares A/c:

900 × ₹ 25 = ₹ 22,500

Reissue:

900 shares were reissued for ₹ 90 per share as ₹ 75 paid-up.

Cash received:

900 × ₹ 90 = ₹ 81,000

Share Capital credited:

900 × ₹ 75 = ₹ 67,500

Premium on reissue:

₹ 81,000 − ₹ 67,500 = ₹ 13,500

Since there is no discount on reissue, the entire forfeited amount is transferred to Capital Reserve:

₹ 22,500​