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प्रश्न
Give necessary journal entries:
(i) The Directors of Devendra Ltd. resolved on 1st January 2010 that Equity Shares of ₹ 10 each, ₹ 8 paid-up be forfeited for non-payment of final call of ₹ 2. On 1st February, 60 of these shares were reissued @ ₹ 7 per share as fully paid-up.
(ii) Virender Limited forfeited 20 shares of ₹ 100 each(₹ 60 called-up) issued at par to Mukesh on which he had paid ₹ 20 per share. Out of these, 15 shares were reissued to Sanjeev as ₹ 60 paid-up for ₹ 45 per share.
उत्तर
(i) Book of Devendra Limited
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Journal |
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Date |
Particulars |
L.F. |
Debit |
Credit |
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2010 |
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Jan. 01 |
Equity Share Capital A/c |
Dr. |
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1,000 |
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To Share Forfeiture A/c |
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800 |
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To Calls-in-Arrears A/c |
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200 |
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(100 shares of Rs 10 each forfeited for the non-payment of Rs 2 per share) |
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Feb. 01 |
Bank A/c |
Dr. |
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420 |
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Share Forfeiture A/c |
Dr. |
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180 |
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To Equity Share Capital A/c |
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600 |
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(60 shares of Rs 10 each re-issued at Rs 7 per share, fully paid-up) |
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Share Forfeiture A/c |
Dr. |
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300 |
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To Capital Reserve A/c |
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300 |
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(Balance in Share Forfeiture Account of 60 shares after re-issue transferred to Capital Reserve) |
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Working Note:
Forfeiture of re-issued shares
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Share Forfeiture per share Credit |
= Rs. 8 |
| Share Forfeiture per share Debit |
= Rs. 3 |
| Balance in Share Forfeiture after re-issue per share |
= Rs. 5 |
Capital Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued
= Rs. 5 × 60 = Rs. 300
(ii) In the books of Virender Ltd.
| Journal | ||||
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
| Share Capital A/c Dr. | 1200 | |||
| To Share Forfeiture A/c | 400 | |||
| To Calls-in-Arrears A/c | 800 | |||
| (Being 20 Shares of 100 each Rs. 60 Called-up forfeited for the non-payment of Rs. 40 per share.) | ||||
| Bank A/c Dr. | 675 | |||
| Share Forfeiture A/c Dr. | 225 | |||
| To Share Capital A/c | 900 | |||
| (Being 15 shares of 100 each re-issued at Rs. 45 per share, Rs. 60 fully paid up.) | ||||
| Share Forfeiture A/c Dr. | 75 | |||
| To Capital Reserve A/c | 75 | |||
| (Being balance in the share forfeiture account of 15 shares after re-issue transferred to capital reserve.) | ||||
Working Note:
Capital Reserve
Forfeiture of re-issued shares
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Share Forfeiture per share Cr. (at the time of forfeiture) |
= Rs. 8 |
| Share Forfeiture per share Dr. (at the time of re-issue) |
= Rs. 3 |
| Balance in Share Forfeiture after re-issue per share |
= Rs. 5 |
Capital Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued
= Rs. 5 × 15 = Rs. 75
APPEARS IN
संबंधित प्रश्न
What is the maximum amount of discount at which forfeited share can be re-issued?
AB Ltd. invited applications for issuing 75,000 equity shares of Rs.100 each at a premium of Rs.30 per share. The amount was payable as follows:
On Application and Allotment - Rs.85 per share (including premium)
On First and Final call - the balance amount
Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and shares were allotted on pro-rata basis to the remaining applicants. Excess money received on application and allotment was adjusted towards sums due to first and final call. The calls were made. A shareholder, who applied for 1,000 shares, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs.150 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of AB Ltd.
Give the meaning of forfeiture of shares
Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each. The amount was payable as follows :
On application and allotment - Rs 4 per share
On the first call - Rs 3 per share
On second and final call - balance
Application for 1,00,000 shares was received. Shares were allotted to all the applicants on pro-rata basis and excess money received with applications was transferred towards sums due on the first call. Vibha who was allotted 750 shares failed to pay the first call. Her shares were immediately forfeited.
Afterwards, the second call was made. The amount due on the second call was also received except on 1000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were re-issued to Mohit for Rs 9,000 as fully paid up.
Pass necessary journal entries in the books of Alfa Ltd. for the above transactions
'Wellness Ltd.' invited applications for issuing 40,000 equity shares of Rs 10 each at a discount of 10%.
The amount was payable as follows :
On application and allotment - Rs 4 per share
On the first call - Rs 3 per share
On second and final call - the balance
Applications for 39,000 shares were received and the allotment was made to all the applicants.
The payment was received as per the following details:
On 30,000 shares - Full amount
On 6,000 shares - Rs 7 per share
On 3,000 shares - Rs 4 per share
The Directors forfeited those shares on which less than Rs 7 per share were received. The forfeited shares were re-issued at `8 per share as fully paid up.
Pass necessary Journal Entries in the books of the company for the above transactions.
Ratan Limited invited applications for issuing 12,000 equity shares of Rs 100 each at a premium of Rs 75 per share. The amount was payable as follows :
On application and allotment — Rs 100 per share (including Rs 50 premium)
On first and final call — The balance
Applications for 15,000 shares were received. Shares were allotted on pro-rata basis to all applicants. Excess money received with applications was adjusted towards sums due on first and final call. Govind who had applied for 300 shares paid the full share money at the time of applying for shares. Girdhar, who had applied for 600 shares, failed to pay the first and final call money. His shares were forfeited. Out of the forfeited shares, 300 shares were re-issued at Rs 90 per share as fully paid-up.
Pass necessary journal entries for the above transactions in the books of 'Ratan Limited'.
On 1st April 2012, Micro-tech Ltd. was formed with an authorised capital of Rs 50,00,000 divided into 5,00,000 equity shares of Rs 10 each. The company issued a prospectus inviting applications for 4,50,000 equity shares. The company received applications for 4,20,000 equity shares.
During the first year, Rs 8 per share were called. Ram holding 1,000 shares and Rajesh holding 2,000 shares did not pay the first call of Rs 2 per share. Rajesh's shares were forfeited after the first call and later on 1,500 of the forfeited share were re-issued at Rs 6 per share, Rs 8 called up. Show the following:
a. Share Capital in the Balance Sheet of the company as per revised Schedule VI Part I of the Companies Act, 1956.
b. Also, prepare 'Notes to Accounts' for the same
Select the appropriate answer from the alternative given below and rewrite the sentence.
When shares are forfeited, share capital account is _____________.
(Forfeiture of shares issued at par)
Vijay Ltd. issued Rs 40,000 Equity shares of Rs 10 each payable as follows.
| On Application : | Rs 2 | On Allotment : | Rs 3 |
| On First Call : | Rs 3 | On Second Call : | Rs.2 |
The company received applications for Rs 50,000 equity shares. Allotment for shares was made on pro rata basis. Share allotment and calls were made and as also received except Raja holding Rs 1,000 shares failed to pay both the calls. His shares were forfeited after second call.
Record the above transactions in books of Vijay Ltd.
Note: Excess money received on share application 10,000 × Rs 2 = 20,000 will be diverted to share allotment A/c.
(Forfeiture of shares issued at premium)
The Century Ltd. issued 8,000 shares of Rs 100 at a premium of 10% payable as under-
| On Application | Rs 25 | On Allotment | Rs 40 (including premium) |
| On First Call | Rs 20 | On Second Call | Rs 25 |
Company called up allotment and both the calls which were duly received except Ramesh to whom 500 shares were allotted failed to pay allotment and calls. Prepare Journal of Century Ltd.
Long Answer Question
Explain the term ‘Forfeiture of Shares’ and give the accounting treatment on forfeiture.
The Hindustan Manufacturing Ltd. had a total subscribed capital of ₹ 10,00,000 in Equity Shares of ₹ 10 each of which ₹ 7.50 were called-up. A final call of ₹ 2.50 was made and all amount paid except two calls of ₹ 2.50 each in respect of 100 shares held by D . These shares were forfeited and reissued at ₹ 8 per share .
Pass necessary journal entries (including that of cash) to record the transactions of final call , forfeiture of shares and reissue of forfeited shares . Also, prepare the Balance Sheet of the company.
Star Ltd. forfeited 500 Equity Shares of ₹ 100 each for non-payment of first call of ₹ 30 per share . The final call of ₹ 10 per share was not yet made. Out of these, 60% shares were reissued for ₹ 39,000 fully paid. journalise the forfeiture and reissue of shares.
Pass journal entries in the following cases:
M Ltd forfeited 200 Equity Shares of ₹10 each , issued at a premium of ₹ 5 per share , held by Ram for non-payment of the final call of ₹ 3 per share . Of these , 100 shares were reissued to Vishu at a discount of ₹ 4 per share .
Krishna & Co. Ltd. with an authorised capital of ₹ 2,00,000 divided into 20,000 Equity Shares of ₹ 10 each, issued the entire amount of the shares payable as:
₹ 5 on application (including premium ₹ 2 per share),
₹ 4 on allotment, and
₹ 3 on call.
All share money is received in full with the exception of the allotment money on 200 shares and the call money on 500 shares (including the 200 shares on which the allotment money has not been paid).
The above 500 shares are duly forfeited and 400 of these( including the 200 shares on which allotment money has not been paid) are reissued at ₹ 7 per share payable by the purchaser as fully paid-up. Pass journal entries(including cash transactions) and show the balances in the Balance Sheet giving effect to the above transactions.
Himalaya Company Limited issued for public subscription 1,20,000 equity shares of ₹ 10 each at a premium for ₹ 2 per share payable as under:
| With Application | --- | ₹ 3 per share, |
| On allotment (including premium) | -- | ₹ 5 per share, |
| On First call | -- | ₹ 2 per share |
| On Second and Final call | -- | ₹ 2 per share. |
Applications were received for 1,60,000 shares . Allotment was made on pro rata basis . Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited after the second call was made . All the shares forfeited were reissued to Teena as fully paid at ₹ 7 per share.
Record journal entries and show the transactions relating to share capital in the company's Balance Sheet.
Jeevan Dhara Ltd. invited applications for issuing 1,20,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows
| On application | ---- | ₹ 2 per share, |
| On allotment |
---- |
₹ 5 per share(including premium), |
| On first and final call |
---
|
Balance. |
Applications for 1,50,000 shares were received . Shares were allotted to all the applicants on pro rata basis. Excess money received on applications was adjusted towards sums due on allotment . All calls were made. Manu who had applied for 3,000 shares failed to pay the amount due on allotment and first and final call Madhur who was allotted 2,400 shares failed to pay the first and final call . Shares of both Manu and Madhur were forfeited . The forfeited shares were reissued at ₹ 9 per share as fully paid-up .
Pass necessary journal entries for the above transactions in the books of Jeevan Dhara Ltd.
XYZ Ltd . issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a premium of ₹ 4 per share , payable as:
| On application | --- | ₹ 6 (including ₹ 1 premium) |
| On allotment | --- | ₹ 2 (including ₹ 1 premium) |
| On first call | --- | ₹ 3 (including ₹ 1 premium) |
| On second and final call | --- | ₹ 3 (including ₹ 1 premium) |
Applications were received for 3,000 shares and pro rata allotment was made on the applications for 2,400 shares. It was decided to utilise excess application money towards the amount due on allotment .
X, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call , his shares were forfeited.
Y, who applied for 72 shares failed to pay the two calls and on his such failure , his shares were forfeited.
Of the shares forfeited , 80 shares were sold to Z credited as fully paid-up for ₹ 9 per share , the whole of Y's shares being included . Prepare Journal , Cash Book and the Balance Sheet .
DF Ltd. invited applications for issuing 50,000 shares of ₹ 10 each at a premium of ₹ 2 per share. The amount was payable as follows:
On Application : ₹ 3 per share (including premium ₹ 1)
On Allotment : ₹ 3 per share (including premium ₹ 1)
On First call : ₹ 3 per share
On Second and Final Call: Balance amount
Application for 70,000 shares was received. Allotment was made on the following basis.
Applications for 5,000 shares – Full
Applications for 50,000 shares – 90%
Balance of the applications was rejected. ₹ 1,11,000 were received on account of allotment. The amount of allotment due from the shareholders to whom shares were allotted on pro-rata basis was fully received. A few shareholders to whom shares were allotted in full, failed to pay the allotment money. ₹ 1,20,000 were received on the first call. Directors decided to forfeit those shares on which allotment and call money were due. Half of the forfeited shares were re-issued @ ₹ 8 per share fully paid up. Final call was not made.
Pass the necessary journal entries for the above transactions in the book of DF Ltd.
Share Forfeiture account is a ________.
Money received in advance from shareholders before it is actually called-up by the directors is ______.
Apaar Ltd forfeited 4,000 shares of ₹20 each, fully called up, on which only application money of ₹6 has been paid. Out of these 2,000 shares were reissued and ₹8,000 has been transferred to capital reserve. Calculate the rate at which these shares were reissued.
Shares can be forfeited for?
If a share of ₹ 10 on which ₹ 8 has been called and ₹ 6 has been paid is forfeited, the Share Capital Account should be debited with:
Z and Co. forfeited 100 shares of ₹ 10 each for non-payment of the final call of ₹ 2 per share. All the forfeited shares were re-issued at ₹ 9 per share. What amount will be transferred to Capital Reserve A/c?
Which of the following statement is false?
When forfeited shares are re-issued the amount of discount allowed on these shares cannot exceed ______.
A forfeited share can ______
If 400 shares of ₹ 100 issued at a premium of ₹ 30 on which the full amount has been called and ₹ 80 (including premium) have been received are forfeited, the share forfeiture account should be credited with ______.
Pass entries for forfeiture and re-issue in the following case.
Vikram Ltd. forfeited 5,000 shares of Rahul, who had applied for 6,000 shares for non-payment of allotment money of ₹ 5 per share and first and final call of ₹ 2 per share. Only application money of ₹ 3 was paid by him. Out of these 3,000 shares were re-issued @ ₹ 12 per share as fully paid.
An equity share of ₹10 fully called up on which ₹ 6 has been paid was forfeited for the non-payment of the balance amount. At which of the following minimum price can it be reissued?
Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
Deepak Ltd. forfeited 800 shares of ₹ 10 each, ₹ 8 per share called up, for non-payment of first call of ₹ 3 per share. All the forfeited shares were reissued for ₹ 12 per share fully paid.
A company forfeited 3,000 shares of ₹ 10 each, on which only ₹ 5 per share (including ₹ 1 premium) has been paid. Out of these few shares were re-issued at a discount of ₹ 1 per share were and ₹ 6,000 were transferred to Capital Reserve. How many shares were re-issued?
MV Ltd. was registered with a capital of ₹ 2,00,000 divided into 10,000 Equity shares of ₹ 20 each payable as follows:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 7 per share |
| On First & Final Call | ₹ 8 per share |
The company offered 5,000 shares to the public for subscription. It received applications for 6,700 shares.
From amongst the applicants:
- Vimal, who had applied for 1,500 shares, paid ₹ 7,500 on application, but was allotted only 800 shares.
- Abhay, who had applied for 2,000 shares, paid the full amount of ₹ 40,000 with his application, but was allotted only 1,000 shares.
- Nitin, who had applied for and allotted 500 shares, did not pay the allotment and call money when due.
- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Abhay was used towards allotment and call and any surplus beyond the call was refunded.
The company forfeited Nitin's shares after the final call.
You are required to pass journal entries to record the above transactions in the books of the company.
Savi Ltd. forfeited 50 shares of ₹ 100 each issued at a premium of 10%, on which allotment money of ₹ 30 per share (including premium) and first and final call of ₹ 40 per share were not received.
What is the minimum amount per share at which the company can reissue these shares?
