Question

Given Journal entries to record the following transaction of forfeiture and re-issue of shares and open share forfeited account in the books of the respective companies.

(i) C Ltd. forfeited 1,000 shares of Rs 100 each issued at a discount of 8%. On these shares the first call of Rs 30 per share was not received and the final call of Rs 20 per share was yet to be called. These shares were subsequently re-issued at Rs 70 per share Rs 80 paid up.

(ii) L Ltd. forfeited 470 equity share of Rs 10 each issued at a premium of Rs 5 per share for non-payment of allotment money of Rs 8 per share (including share premium Rs 5 per share) and the first and final call of Rs 5 per share. Out of these 60 Equity share were subsequently re-issued at Rs 14 per share.

Answer 1

In the books of C Ltd.                                       Journal
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Share Capital A/c (1,000 shares × Rs 80)		Dr.		80,000
	To Share Forfeiture A/c (1,000  shares × Rs 42)					42,000
	To Discount on Issue of Shares A/c (1,000 shares × Rs 8)					8,000
	To Share First Call A/c (1,000 shares × Rs 30)					30,000
	(1,000 shares forfeited due to non-payment of first call)
	Bank A/c (1,000 shares × Rs 70)		Dr.		70,000
	Discount on Issue of Shares A/c (1,000 shares × Rs 8)	Dr.			8,000
	Share Forfeiture A/c (1,000 shares × Rs 2)	Dr.			2,000
	To Share Capital A/c (1,000 shares × Rs 80)					80,000
	(1,000 shares re-issued at Rs 70 per share Rs 80 paid up)
	Share Forfeiture A/c		Dr.		40,000
	To Capital Reserve A/c					40,000
	(Profit on re-issue transferred to Capital Reserve)

Share Forfeiture Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Share Capital	2,000	Share Capital	42,000
Capital Reserve	40,000
	42,000		42,000

 

In the Books of L Ltd.                             Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Equity Share Capital A/c (470 shares × Rs 10)	Dr.		4,700
	Securities Premium A/c (470 shares × Rs 5)	Dr.		2,350
	To Share Forfeiture A/c (470  shares× Rs 2)				940
	To Equity Share Allotment A/c (470 shares × Rs 8)				3,760
	To Equity Share First and Final Call A/c (470 shares × Rs 5)				2,350
	(470 shares forfeited due to not payment of allotment and call money)
	Bank A/c (60 shares× Rs 14)	Dr.		840
	To Equity Share Capital A/c (60 shares × Rs 10)				600
	To Securities Premium A/c (60 shares × Rs 4)				240
	(60 shares re-issued at of Rs 14 per share)
	Share Forfeiture A/c	Dr.		120
	To Capital Reserve A/c (WN)				120
	(Profit on re-issue transferred to Capital Reserve)

 

Share Forfeiture Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Capital Reserve	120	Share Capital A/c	940
To Balance c/d	820
	940		940