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Question
Ashoka Limited Company which had issued equity shares of Rs.20 each at a premium of Rs. 4 per share, forfeited 1,000 shares for non-payment of final call of Rs.2 per share. 400 of the forfeited shares were reissued at Rs.14 per share out of the remaining shares of 200 shares reissued at Rs.20 per share. Give journal entries for the forfeiture and reissue of shares and show the amount transferred to capital reserve and the balance in Share Forfeiture Account.
Solution
Books of Ashoka Limited
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
||
|
|
Share Capital A/c |
Dr. |
|
20,000 |
|
|
|
|
|
To Final Call A/c |
|
|
2,000 |
|
|
|
|
To Share Forfeiture A/c |
|
|
18,000 |
|
|
|
(1,000 Shares of 20 per share forfeited for nonpayment of Share Final Call money @ ₹2 per share) |
|
|
|
||
|
|
Bank A/c (400×14) |
Dr. |
|
5,600 |
|
|
|
|
Share Forfeiture A/c (400×6) |
Dr. |
|
2,400 |
|
|
|
|
|
To Share Capital A/c |
|
|
|
8,000 |
|
|
(400 shares @ ₹20 per share reissued for ₹14 per share fully paid-up) |
|
|
|
||
|
|
Bank A/c |
Dr. |
|
4,000 |
|
|
|
|
|
To Share Capital A/c |
|
|
|
4,000 |
|
|
(200 shares @ ₹20 per share reissued for ₹20 per share fully paid-up) |
|
|
|
|
|
|
|
Share Forfeiture A/c |
Dr. |
|
8,400 |
|
|
|
|
|
To Capital Reserve |
|
|
|
8,400 |
|
|
(Balance of 600 shares in Share Forfeiture Account transferred to Capital Reserve Account, after reissue) |
|
|
|
||
Balance in Share Forfeiture Account (18,000 - 10,800) = Rs 7,200
Working Notes:
For 400 Shares
|
Share Forfeiture Account credited |
₹18 per share |
|
Less: Share Forfeiture Account debited |
₹6 per share |
|
Amount transferred to Capital Reserve Account, after adjustment |
₹12 per share |
Amount of 400 shares transferred to Capital Reserve Account, after reissue
= 400 Shares @ ₹ 12 per share
= Rs 4,800
For 200 Shares
|
Share Forfeiture Account credited |
₹18 per share |
|
Less: Share Forfeiture Account debited |
Nil |
|
Amount transferred to Capital Reserve Account, after adjustment |
₹18 per share |
Amount of 200 shares transferred to Capital Reserve Account, after reissue
= 200 Shares @ Rs 18 per share
= ₹3,600
Total amount transferred to capital reserve account for 600 shares
=Capital reserve for 400 shares + capital reserve for 200 shares
= 4,800+3,600
= 8,400
Note: As per the answer amount transferred to capital reserve is ₹6,800 however, it is not correct as the shares reissued at a discount will be provided through Share Forfeiture Account and the valance will be ₹8,400.
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