Question

Journalise the following:

Y Ltd. forfeited 400 shares of ₹100 each, issued at a premium of ₹5 per share (to be paid at the time of allotment) for non-payment of a first call of ₹20 per share. The second and final call of ₹20 has not yet been called. Out of these, 100 shares were re-issued on fully paid-up at the maximum rate of discount allowed by law.

Answer 1

Journal entries  In the books of Y Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c     ...Dr.		32,000
	To Share First Call A/c			8,000
	To Share Forfeiture A/c			24,000
	(Being 400 shares of ₹100 each forfeited for non-payment of first call of ₹20 per share; premium already received)
2.	Bank A/c     ...Dr.		15,000
	Share Forfeiture A/c     ...Dr.		10,000
	To Share Capital A/c			25,000
	(Being 100 forfeited shares reissued as fully paid-up at a discount of ₹25 per share)

Working Notes:

1) Called-up amount at forfeiture = ₹100 – ₹20 (not yet called) = ₹80 per share → ₹80 × 400 = ₹32,000 debited from Share Capital

2) Unpaid = ₹20 (first call) × 400 = ₹8,000 → credited to Share First Call A/c

3) Amount received = ₹105 – ₹20 (first call) – ₹20 (not yet called) = ₹65
→ ₹65 × 400 = ₹26,000 → Share Forfeiture = ₹24,000 (₹2,000 from premium already received is excluded)

4) Reissue at maximum discount = ₹25 per share on 100 shares = ₹2,500
→ ₹25 × 100 = ₹2,500
But only ₹10,000 used from Share Forfeiture, hence Capital Reserve = NIL