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Question
Goutham Ltd. forfeited 500 equity shares of ₹ 10 each issued at par held by Ragav for nonpayment of the final call of ₹ 2 per share. The shares were forfeited and reissued to Madhan at ₹ 8 per share. Show the journal entries for forfeiture and reissue.
Journal Entry
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Solution
| Date | Particulars | L.F. | Debit Rs. | Credit Rs. |
| (1) | Share Capital A/c (500 × Rs. 10) Dr. To share final call A/c (500 × Rs. 2) To Forfeiture of shares A/c [Forfeiture of shares made] |
5,000 | 1,000 4,000 |
|
| (2) | Bank A/c (500 × Rs. 8) Dr. Forfeited shares A/c (500 × Rs. 2) Dr. To Share capital A/c [Reissue of forfeited shares] |
4,000 1,000 |
5,000 | |
| (3) | Forfeited shares A/c Dr. To Capital Reserve A/c [Profit on reissue transferred to capital reserve] |
3,000 | 3,000 |
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