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X Ltd . Forfeited 100 Shares of ₹ 10 Each (₹ 8 Called-up) Issued at a Premium of ₹ 2 per Share to Mr. R, - Accountancy

Journal Entry

X Ltd . forfeited 100 shares of ₹ 10 each (₹ 8 called-up) issued at a premium of ₹ 2 per share to Mr. R, on which he had paid applications money of ₹ 5 per share , for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 70 shares were reissued to Mr . Sanjay as ₹ 8 called-up for ₹ 7 per share. Give necessary journal entries relating to forfeiture and reissue of shares. 

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Solution

Books of X Limited 
Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Share Capital A/c (100 × 8)

Dr.

 

800

 

 

Securities Premium A/c (100 × 2)

Dr.

 

200

 

 

To Share Forfeiture A/c (100 × 5)

 

 

500

 

To Calls-in-Arrears A/c (100 × 5)

 

 

500

 

(100 shares of Rs 10 each, Rs 8 called-up with premium Rs 2 per share, forfeited for the non-payment of Rs 5 each including Rs 2 premium)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

490

 

 

Share Forfeiture A/c

Dr.

 

70

 

 

To Share Capital A/c

 

 

560

 

(70 shares of Rs 10 each re-issued at Rs 7 per share, Rs 8 paid-up)

 

 

 

 

 

 

 

 

 

Share Forfeiture A/c

Dr.

 

280

 

 

To Capital Reserve A/c 

 

 

280

 

(Balance of 70 shares re-issued shares in Share Forfeiture Account transferred to Capital Reserve)

 

 

 

Working Note-

Share Forfeiture Credit

5

per share

Less: Share Forfeiture Debit

1

per share

Balance in Share Forfeiture of re-issued shares

4

per share

Capital Reserve = Balance in Share Forfeiture Account of re-issued shares × No. of shares re-issued

= 70 × 4

= Rs 280 

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 51 | Page 121
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