Question

Pass journal entries for the forfeiture and re-issue in the following case:

Z Ltd. forfeited 300 shares of ₹100 each on which first call of ₹20 per share was not received, the second and final call of ₹30 per share has not yet been called. Out of these, 200 shares were re-issued as ₹70 paid-up for ₹55 per share.

Answer 1

Journal entries In the books of Z Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c (300 × ₹70)     ...Dr.		21,000
	To Calls in Arrears A/c (300 × ₹20)			6,000
	To Share Forfeiture A/c (300 × ₹50)			15,000
	(Being 300 shares forfeited for non-payment of first call ₹20 per share)
2.	Bank A/c (200 × ₹55)     ...Dr.		11,000
	Share Forfeiture A/c (200 × ₹15)     ...Dr.		3,000
	To Share Capital A/c (200 × ₹70)			14,000
	(Being 200 forfeited shares reissued at ₹55 each as ₹70 paid-up)
3.	Share Forfeiture A/c     ...Dr.		7,000
	To Capital Reserve A/c			7,000
	(Being gain on reissue of 200 shares transferred to Capital Reserve)

Working Note:

1) Share forfeiture on 300 shares = 300 × ₹50 = ₹15,000

2) For 200 shares reissued:
Discount = ₹70 (called-up) – ₹55 (received) = ₹15
Total discount = 200 × ₹15 = ₹3,000

3) Forfeiture used = ₹3,000

4) Remaining profit = 200 × ₹35 = ₹7,000 → Capital Reserve