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Star Ltd. Forfeited 500 Equity Shares of ₹ 100 Each for Non-payment of First Call of ₹ 30 per Share . - Accountancy

Journal Entry

Star Ltd. forfeited 500 Equity Shares of ₹ 100 each for non-payment of first call of ₹ 30 per share . The final call of ₹ 10 per share was not yet made. Out of these, 60% shares were reissued for ₹ 39,000 fully paid. journalise the forfeiture and reissue of shares.

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Solution

Journal

Date

Particulars 

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Equity Share Capital A/c  (500×90)

Dr.

 

45,000

 

 

  To  Equity Share 1st Call A/c (500×30)

 

 

 

15,000

 

  To Share Forfeited A/c (500×60)

 

 

 

30,000

 

( 500 equity shares forfeited for non-payment of final call)

 

 

 

 

 

 

 

 

 

 

 

Bank A/c (300×130)

Dr.

 

39,000

 

 

      To Equity Share Capital A/c (300×100)

 

 

 

30,000

 

     To Security Premium Reserve A/c (300×30)

 

 

 

9,000

 

(300 shares are reissued @130 per share)

 

 

 

 

 

 

 

 

 

 

 

Share Forfeited A/c

Dr.

 

18,000

 

 

  To Capital Reserve A/c

 

 

 

18,000

 

( Profit on reissue of 300 shares transferred to Capital Reserve)

 

 

 

 

Working Note:

Amount transferred to Capital Reserve

Shares Re-issued = 300

Shares Forfeited = 500

Amount forfeited in respect of 300 shares

= `"Amount Forfeited" xx "Shares Re-issued"/"Shares Forfeited"`

=`30000 xx 300/500 = 18000`

Concept: Accounting Treatment of Forfeiture and Re-issue of Share
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 1 Accounting for Share Capital
Exercise | Q 56 | Page 121
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