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Question
Rekha holds 100 shares of ₹ 10 each on which she has paid ₹ 1 per share on application.
Sunita holds 200 shares of ₹ 10 each on which she has paid ₹ 1 and ₹ 2 per share on application and allotment respectively.
Teena holds 300 shares of ₹ 10 each and has paid ₹ 1 on application, ₹ 2 on allotment and ₹ 3 on first call.
They all fail to pay their arrears and the second call of ₹ 4 per share. Shares are forfeited and subsequently reissued @ ₹ 11 per share as fully paid-up.
Journalise the above.
[Hint: As shares have been reissued at premium, discount allowed on reissue is Nil. Thus, total amount of ₹ 2,500 credited to Forfeited Shares Account will be transferred to Capital Reserve.]
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Solution
| Journal Entries | ||||
|---|---|---|---|---|
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
| 1. | Share Capital A/c ...Dr. | 6,000 | ||
| To Shares Allotment A/c | 200 | |||
| To Shares First Call A/c | 900 | |||
| To Shares Second Call A/c | 2,400 | |||
| To Share Forfeiture A/c | 2,500 | |||
| (600 shares forfeited for non-payment of amounts due) | ||||
| 2. | Bank A/c ...Dr. | 6,600 | ||
| To Share Capital A/c | 6,000 | |||
| To Securities Premium A/c | 600 | |||
| (600 forfeited shares reissued @ ₹ 11 per share as fully paid-up) | ||||
| 3. | Share Forfeiture A/c ...Dr. | 2,500 | ||
| To Capital Reserve A/c | 2,500 | |||
| (Gain on reissue transferred to Capital Reserve) | ||||
Working Note:
Total shares forfeited:
100 + 200 + 300 = 600 shares
1. Rekha
Amount received:
100 × ₹ 1 = ₹ 100
Unpaid amount:
100 × (₹ 2 + ₹ 3 + ₹ 4) = ₹ 900
2. Sunita
Amount received per share:
₹ 1 + ₹ 2 = ₹ 3
200 × ₹ 3 = ₹ 600
Unpaid amount:
200 × (₹ 3 + ₹ 4) = ₹ 1,400
3. Teena
Amount received per share:
₹ 1 + ₹ 2 + ₹ 3 = ₹ 6
300 × ₹ 6 = ₹ 1,800
Unpaid amount:
300 × ₹ 4 = ₹ 1,200
Total Amount Forfeited:
₹ 100 + ₹ 600 + ₹ 1,800 = ₹ 2,500
Reissue:
600 shares reissued @ ₹ 11 per share:
600 × ₹ 11 = ₹ 6,600
Share Capital:
600 × ₹ 10 = ₹ 6,000
Securities Premium:
₹ 6,600 − ₹ 6,000 = ₹ 600
Since shares are reissued at a premium, there is no discount on reissue. Therefore, the entire forfeited amount is transferred to Capital Reserve.
Capital Reserve = ₹ 2,500
