Question

Pass necessary Journal entries for forfeiture and reissue of shares in the following case:

Mamta Ltd. forfeited 3,000 shares of ₹ 10 each on which the first call of ₹ 3 per share was not received. The second and final call of ₹ 1 per share was not yet called. Out of these, 2,000 shares were reissued at ₹ 9 per share, ₹ 9 paid-up.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		27,000
	To Shares First Call A/c			9,000
	To Share Forfeiture A/c			18,000
	(3,000 shares forfeited for non-payment of First Call)
2.	Bank A/c   ...Dr.		18,000
	To Share Capital A/c			18,000
	(2,000 forfeited shares reissued @ ₹ 9 per share as fully paid-up)
3.	Share Forfeiture A/c   ...Dr.		12,000
	To Capital Reserve A/c			12,000
	(Gain on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 10

Second and Final Call of ₹ 1 per share was not yet called.

Therefore, called-up capital per share:

₹ 10 − ₹ 1 = ₹ 9

First Call unpaid = ₹ 3 per share.

Amount received per share:

₹ 9 − ₹ 3 = ₹ 6

Forfeiture of 3,000 Shares:

Share Capital called-up:

3,000 × ₹ 9 = ₹ 27,000

Amount credited to Share Forfeiture A/c:

3,000 × ₹ 6 = ₹ 18,000

Reissue of 2,000 Shares:

Reissued at ₹ 9 per share as fully paid-up.

Cash received:

2,000 × ₹ 9 = ₹ 18,000

Share Capital credited:

2,000 × ₹ 9 = ₹ 18,000

No discount on reissue.

Forfeited amount relating to 2,000 shares:

`18,000 xx (2,000)/(3,000) = 12,000`

Capital Reserve:

₹ 12,000