Question

B Ltd. forfeited 500 shares of ₹10 each issued at 20% premium (to be paid at the time of allotment) for non-payment of the first call of ₹3 per share and final call of ₹2 per share. Out of these, 300 shares were re-issued as fully paid-up for ₹10 per share. Journalise.

Answer 1

Journal Entries In the books of B Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c     ...Dr.		5,000
	To Calls in Arrears A/c			2,500
	To Share Forfeiture A/c			2,500
	(Being Forfeiture of 500 shares for non-payment of calls)
2.	Bank A/c     ...Dr.		3,000
	To Share Capital A/c			3,000
	(Being Re-issue of 300 shares @ ₹10 fully paid)
3.	Share Forfeiture A/c     ...Dr.		1,500
	To Capital Reserve A/c			1,500
	(Being Profit on re-issue transferred to Capital Reserve)

Working Note:

1) Forfeiture (500 shares):
Calls unpaid = 1st Call ₹3 + Final Call ₹2 = ₹5 per share.
Capital forfeited = 500 × 10 = ₹5,000 (Dr).
Calls in Arrears = 500 × 5 = ₹2,500.
Amount actually received = Application + Allotment = (₹5 per share × 500) = ₹2,500.
So, Share Forfeiture = ₹2,500.

2) Re-issue (300 shares @ ₹10 fully paid):
Issued at par = no discount/premium.
Bank A/c Dr = 300 × 10 = ₹3,000.
To Share Capital = ₹3,000.

3) Capital Reserve:
Proportionate to 300 shares re-issued = 300/500 × 2,500 = ₹1,500