Question

Pass necessary journal entries in the books of the company for the following transactions:

Vishesh Ltd. forfeited 1,000 Equity Shares of ₹ 10 each issued at a premium of ₹ 2 per share for non-payment of allotment money of ₹ 5 per share including premium. The final call of ₹ 2 per share was not yet called on these shares. Of the forfeited shares 800 shares were reissued at ₹ 12 per share as fully paid-up. The remaining shares were reissued at ₹ 11 per share fully paid-up.

Answer 1

Journal Entries in the Books of Vishesh Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Share Capital A/c   ...Dr.		8,000
	Securities Premium A/c   ...Dr.		2,000
	To Shares Allotment A/c			5,000
	To Share Forfeiture A/c			5,000
	(1,000 shares forfeited for non-payment of allotment money including premium)
2.	Bank A/c   ...Dr.		9,600
	To Share Capital A/c			8,000
	To Securities Premium A/c			1,600
	(800 forfeited shares reissued @ ₹ 12 per share as fully paid-up)
3.	Bank A/c   ...Dr.		2,200
	To Share Capital A/c			2,000
	To Securities Premium A/c			200
	(Remaining 200 forfeited shares reissued @ ₹ 11 per share as fully paid-up)
4.	Share Forfeiture A/c   ...Dr.		5,000
	To Capital Reserve A/c			5,000
	(Gain on reissue transferred to Capital Reserve)

Working Note:

Face value per share: ₹ 10

Premium per share: ₹ 2

Final Call of ₹ 2 per share was not yet called.

Therefore, called-up Share Capital per share:

₹ 10 − ₹ 2 = ₹ 8

Allotment money = ₹ 5 per share, including premium ₹ 2.

Capital portion of allotment:

₹ 5 − ₹ 2 = ₹ 3

Hence, application money received towards capital:

₹ 8 − ₹ 3 = ₹ 5 per share

1. Forfeiture of 1,000 Shares

Share Capital called-up:

1,000 × ₹ 8 = ₹ 8,000

Securities Premium not received:

1,000 × ₹ 2 = ₹ 2,000

Allotment money unpaid:

1,000 × ₹ 5 = ₹ 5,000

Amount credited to Share Forfeiture A/c:

1,000 × ₹ 5 = ₹ 5,000

2. Reissue of 800 Shares @ ₹ 12

Cash received:

800 × ₹ 12 = ₹ 9,600

Share Capital:

800 × ₹ 10 = ₹ 8,000

Securities Premium:

800 × ₹ 2 = ₹ 1,600

3. Reissue of Remaining 200 Shares @ ₹ 11

Cash received:

200 × ₹ 11 = ₹ 2,200

Share Capital:

200 × ₹ 10 = ₹ 2,000

Securities Premium:

200 × ₹ 1 = ₹ 200

Since all 1,000 forfeited shares have been reissued at a premium, there is no discount on reissue. Hence, the entire forfeited amount is transferred to Capital Reserve:

₹ 5,000