Question

Journalise the following:

B Ltd. forfeited 1,000 shares of ₹10 each, ₹8 called-up, for non-payment of Allotment of ₹2.50 per share and first call of ₹3 per share. Out of these, 400 shares were re-issued for ₹7 per share as ₹8 paid-up.

Answer 1

Journal entries In the books of B Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (1,000 × ₹8)     ...Dr.		8,000
	To Calls in Arrears A/c (1,000 × ₹5.50)			5,500
	To Share Forfeiture A/c (1,000 × ₹2.50)			2,500
	(Being 1,000 shares forfeited for non-payment of allotment and first call money)
2.	Bank A/c (400 × ₹7)     ...Dr.		2,800
	Share Forfeiture A/c (400 × ₹1 discount)     ...Dr.		400
	To Share Capital A/c (400 × ₹8)			3,200
	(Being 400 forfeited shares reissued at ₹7 as ₹8 paid-up)
3.	Share Forfeiture A/c     ...Dr.		600
	To Capital Reserve A/c			600
	(Being profit on reissue of 400 shares transferred to Capital Reserve)

Working Notes:

• Forfeiture on 1,000 shares = ₹2,500

• On 400 shares reissued, forfeiture = 400 × ₹2.50 = ₹1,000

• Discount on reissue = 400 × ₹1 = ₹400

• Profit = ₹1,000 – ₹400 = ₹600 → Capital Reserve