Question

Pass the necessary journal entries for forfeiture and reissue of shares in the following cases:

1. Premier Ltd. forfeited 600 shares of ₹ 10 each issued at a premium of ₹ 3 per share (payable with allotment) for non-payment of allotment money of ₹ 7 per share including premium. The first and final call of ₹ 3 per share was not yet made. The forfeited shares were reissued at ₹ 13 per share fully paid up.
2. Risha Ltd. forfeited 1000 shares of ₹ 10 each, ₹ 8 per share called up issued at a premium of ₹ 2 per share to Atul, for non-payment of allotment money of ₹ 6 per share (including premium). Out of these, 800 shares were reissued at ₹ 7 per share, ₹ 8 paid up.

Answer 1

In the Books of Premier Limited Journal
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
	Share Capital A/c    ...Dr.		4,200	-
	Securities Premium A/c    ...Dr.		1,800	-
	To Share Allotment A/c		-	4,200
	To Share Forfeiture A/c		-	1,800
	(Being 600 Shares Forfeited)
	Bank A/c (600 × 13)    ...Dr.		7,800	-
	To Securities Premium A/c		-	1,800
	To Share Capital A/c		-	600
	(Being 600 Shares reissued at a Premium of ₹ 3)
	Share Forfeiture A/c    ...Dr.		1,800	-
	To Capital Reserve A/с		-	1,800
	(Being Balance of share forfeiture account transferred to Capital Reserve Account)

 

In the Books of Risha Limited Journal
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
	Share Capital A/c    ...Dr.		8,000	-
	Securities Premium A/c    ...Dr.		2,000	-
	To Share Allotment A/c		-	6,000
	To Share Forfeiture A/c		-	4,000
	(Being Forfeited of 1,000 Shares)
	Bank A/c     ...Dr.		5,600	-
	Share Forfeiture A/c     ...Dr.		800	-
	To Share Capital A/c		-	6,400
	(Being 800 Shares reissued at ₹ 7 per Shares ₹ 8 paid-up)
	Share Forfeiture A/c    ...Dr.		2,400	-
	To Capital Reserve A/с		-	2,400
	(Being gain on reissue transferred to Capital Reserve)

Working Note:

Note: Gain on 800 Shares = Forfeited balance on 800 shares discount allowed on reissue

= (800 × ₹ 4) – ₹ 800 

= ₹ 2,400