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The Directors of a Company Forfeited 300 Shares of ₹ 10 Each Issued at a Premium of ₹ 3 per Share , - Accountancy

Journal Entry

The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per share , for the non-payment of the first call money of ₹ 2 per share . The final call of ₹ 2 per share has not been made. Half the forfeited shares were reissued at ₹ 1,500 as fully paid-up. Record the journal  entries for the forfeiture and reissue of shares.

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Solution

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Share Capital A/c (300 × 8)

Dr.

 

2,400

 

 

To Share Forfeiture A/c (300 × 6)

 

 

1,800

 

To Calls-In-Arrears (300 × 2)

 

 

600

 

(300 shares of Rs 10 each on which  Rs 8 had called, forfeited for non-payment Rs 2 per share)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,500

 

 

To Share Capital A/c

 

 

1,500

 

(150 shares of Rs 10 each re-issued for the sum of Rs 1,500)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

900

 

 

To Capital Reserve A/c

 

 

900

 

(Balance in Share Forfeiture Account of 150 re-issued shares, transferred to Capital Reserve)

 

 

 

Working Notes

Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture)

Cr.

6

 

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

Dr.

NIL

 

Balance in Share Forfeiture after re-issue

Cr.

6

per share

Capital Reserve = Balance in Share Forfeiture after reissue (per share) × Number of Shares Reissued

= Rs 6 × 150

= Rs 900 

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 64 | Page 122
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