Question

X Ltd. forfeited 1,500 shares of ₹ 10 each (originally issued at a premium of ₹ 3 per share which was payable along with application money) on which allotment money of ₹ 3 and first call money of ₹ 2 were not received; the final call money of ₹ 3 is not yet called. These shares were originally allotted on pro-rata basis in the ratio of 3:2. These shares were subsequently reissued at a discount of ₹ 1 per share, credited as ₹ 7 paid up. Pass necessary Journal entries for forfeiture and reissue of shares.

Answer 1

Journal entries
In the books of X Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (1,500 × ₹ 7)     ...Dr.		10,500
	To Share Allotment A/c (1,500 × ₹ 3)			4,500
	To Share First Call A/c (1,500 × ₹ 2)			3,000
	To Share Forfeiture A/c (1,500 × ₹ 2 [bal.])			3,000
	(Being 1,500 shares forfeited for non-payment of allotment and first call)
2.	Bank A/c (1,050 × ₹ 6)     ...Dr.		6,300
	Share Forfeiture A/c (1,050 × ₹ 1)     ...Dr.		1,050
	To Share Capital A/c (1,050 × ₹ 7)			7,350
	(Being 1,050 shares reissued at ₹ 6 each, ₹ 7 paid-up)
3.	Share Forfeiture A/c     ...Dr.		5,250
	To Capital Reserve A/c			5,250
	(Being profit on reissue transferred to Capital Reserve)

Working Notes:

1) Share Details:

Face Value = ₹ 10

Premium = ₹ 3 (with application)

Amounts unpaid = ₹ 3 (allotment) + ₹ 2 (1st call)

Final Call of ₹ 3 not yet made ⇒ Not called yet

Amount received = ₹ 3 (application) + ₹ 3 (premium) = ₹ 6

Total called-up = ₹ 10 (₹ 7 capital + ₹ 3 premium)

2) Forfeiture Amount:

Forfeited shares = 1,500

Amount received = 1,500 × ₹ 6 = ₹ 9,000

Amount not received = 1,500 × (₹ 3 + ₹ 2) = ₹ 7,500

3) Reissue:

Shares reissued at ₹ 1 discount, credited as ₹ 7 paid-up

Discount = 1,500 × ₹ 1 = ₹ 1,500

Forfeiture used = 1,500 × ₹ 6 = ₹ 9,000

Amount transferred to Capital Reserve = ₹ 9,000 – ₹ 1,500 = ₹ 7,500