Question

Z Ltd. forfeited 700 shares of noo each, issued at a premium of 30% to Ghanshyam on which he had paid application money of ₹35 per share, for non-payment of allotment money of ₹50 per share (including premium) and first call of ₹15 per share. Out of these, 400 shares were re-issued as ₹70 paid-up in such a way that ₹12,000 were transferred to Capital Reserve. Journalise.

Answer 1

Journal entries In the books of Z Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Share Capital A/c		70,000
	Securities Premium A/c		21,000
	To Share Allotment A/c			35,000
	To Share Forfeiture A/c			24,500
	(Being 700 shares forfeited for non-payment of allotment and first call money)
2.	Bank A/c		26,000
	Share Forfeiture A/c		2,000
	To Share Capital A/c			28,000
	(Being 400 shares re-issued as ₹70 paid-up at ₹65 per share)
3.	Share Forfeiture A/c		12,000
	To Capital Reserve A/c			12,000
	(Being profit on re-issue of 400 shares transferred to Capital Reserve)

Working notes:

1) Forfeiture Entry
Application money received: ₹35 × 700 = ₹24,500
Allotment and First Call not paid: ₹35 × 700 = ₹24,500

2) Re-issue of 400 shares as ₹70 paid-up at ₹65 per share
Paid-up value = ₹70 (less than face value of ₹100 → partly paid)
Re-issue price = ₹65 per share (discount = ₹5 per share)
Amount received: ₹65 × 400 = ₹26,000
Discount allowed: ₹5 × 400 = ₹2,000 → to be adjusted from Share Forfeiture A/c
Amount forfeited on 400 shares = ₹35 × 400 = ₹14,000
Capital Reserve = Forfeited – Discount = ₹14,000 – ₹2,000 = ₹12,000