Question

Pass journal entries for the forfeiture and re-issue in the following case:

D Ltd. forfeited 10,000 shares of ₹10 each fully called-up on which the holder has paid only the application money @ ₹3 per share. Out of these, 6,000 shares were re-issued at ₹10.50 per share, fully paid up.

Answer 1

Journal entries  in the books of D Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (10,000 × ₹10)     ...Dr.		1,00,000
	To Calls in Arrears A/c (10,000 × ₹7)			70,000
	To Share Forfeiture A/c (10,000 × ₹3)			30,000
	(Being 10,000 shares forfeited for non-payment of ₹7 per share)
2.	Bank A/c (6,000 × ₹10.50)     ...Dr.		63,000
	To Share Capital A/c (6,000 × ₹10)			60,000
	To Securities Premium A/c (6,000 × ₹0.50)			3,000
	(Being 6,000 shares reissued at ₹10.50 as fully paid-up)
3.	Share Forfeiture A/c     ...Dr.		18,000
	To Capital Reserve A/c			18,000
	(Profit on reissue of 6,000 shares transferred to Capital Reserve)

Working Notes:

Forfeiture on 10,000 shares: ₹30,000 (₹3 per share)

Reissued 6,000 shares: ₹3 × 6,000 = ₹18,000 used

Transferred to Capital Reserve = ₹18,000