Advertisement Remove all ads

Show the Forfeiture and Reissue Entries Under Each of the Following Cases: - Accountancy

Journal Entry

Show the forfeiture and reissue entries under each of the following cases:

(i) X Ltd. forfeited 300 shares of ₹ 10 each, ₹ 8 called-up held by Mr.  A for non-payment of second call money of ₹ 3 per share. These shares were reissued to Mr. Z for ₹ 10 per share as fully paid-up.

(ii) Y Ltd. forfeited 400 shares of ₹ 10 each, fully called-up, held by Mr. B for non-payment of final call money of ₹ 4 per share. These shares were reissued to Mr. T at ₹ 12 per share as fully paid-up.

(iii) Light Ltd. forfeited 250 shares of ₹ 10 each, fully called-up held by Mr. C for non-payment of allotment money of  ₹ 3 per share and first and final call money of ₹ 4 per share. These shares were reissued @ ₹ 8 per share as fully paid-up to Mr. P. 

Advertisement Remove all ads

Solution

(i) 

Books of X Limited
Journal

Date

Particulars

L.F.

Debit

Amount

(₹​)

Credit

Amount

(₹​)

 

Share Capital 

Dr.

 

2,400

 

 

To Share Forfeiture A/c

 

 

1,500

 

To Calls-in-Arrears A/c

 

 

900

 

(300 shares of ₹ 10 each on which had called ₹ 8, forfeited for non-payment of second call ₹ 3 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,000

 

 

To Share Capital A/c

 

 

3,000

 

(300 shares of ₹ 10 each re-issued)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

1,500

 

 

To Capital Reserve A/c

 

 

1,500

 

(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

 

 

Working Notes-

Share Forfeiture Credit (at the time of forfeiture of shares)

1,500

Less: Share Forfeiture Debit (at the time of re-issue shares)

NIL

Balance in Share Forfeiture after re-issue of shares

1,500

Capital Reserve = Balance in Share Forfeiture of re-issued shares

= ₹ 1,500

(ii)

Books of Y Limited
Journal

Date

Particulars

L.F.

Debit

Amount

(₹​)

Credit

Amount

(₹​)

 

Share Capital A/c

Dr.

 

4,000

 

 

To Share Forfeiture A/c

 

 

2,400

 

To Calls-in-Arrears A/c

 

 

1,600

 

(400 shares of ₹ 10 forfeited for the non-payment of final call ₹ 4 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,800

 

 

To Share Capital A/c

 

 

4,000

 

To Securities Premium A/c

 

 

800

 

(400 shares of ₹10 each re-issued at ₹ 12 per share as fully paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

2,400

 

 

To Capital Reserve A/c

 

 

2,400

 

(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

 

 

 

Working Notes-

Share Forfeiture Credit (at the time of forfeiture of shares)

2,400

Less: Share Forfeiture Debit (at the time of re-issue shares)

NIL

Balance in Share Forfeiture after re-issue of shares

2,400

Capital Reserve = Balance in Share Forfeiture of re-issued shares

= ₹ 2,400 

(iii)

Books of Light Limited
Journal

Date

Particulars

L.F.

Debit

Amount

(₹​)

Credit

Amount

(₹​)

 

Share Capital A/c

Dr.

 

2,500

 

 

To Share Forfeiture A/c (250×3)

 

 

750

 

To Calls-in-Arrears A/c

 

 

1,750

 

(250 shares of ₹ 10 each forfeited for the non-payment ₹ 7 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

2,000

 

 

Share Forfeiture A/c

Dr.

 

500

 

 

To Share Capital A/c

 

 

2,500

 

(250 shares of ₹ 10 each re-issued for ₹ 8 per share as fully paid-up )

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

250

 

 

To Capital Reserve A/c

 

 

250

 

(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

 

 

Working Notes-

Share Forfeiture Credit (at the time of forfeiture of shares)

750

Less: Share Forfeiture Debit (at the time of re-issue shares)

500

Balance in Share Forfeiture after re-issue of shares

250

Capital Reserve = Balance in Share Forfeiture of re-issued shares = ₹ 250 

Concept: Accounting Treatment of Forfeiture and Re-issue of Share
  Is there an error in this question or solution?
Advertisement Remove all ads

APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 1 Accounting for Share Capital
Exercise | Q 54 | Page 121
Advertisement Remove all ads
Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×