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Question
Gaurav applied for 5,000 shares of ₹ 10 each at a premium of 2.50 per share. But he was allotted only 2,500 shares on pro rata basis . After having paid ₹ 3 per share on application, he did not pay allotment money of ₹ 4.50 per share (including premium) and on his subsequent failure to pay the first call of ₹ 2 per share, his shares were forfeited. These shares were reissued at the rate of ₹ 8 per share credited as fully paid .
Pass journal entries to record the forfeiture and reissue of shares.
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
Equity Share Capital A/c (2,500×7) |
Dr. |
|
17,500 |
|
|
|
Security Premium Reserve A/c |
Dr. |
|
3,750 |
|
|
|
To Equity Share Allotment A/c |
|
|
|
3,750 |
|
|
To Equity Share First Call A/c (2,500×2) |
|
|
|
5,000 |
|
|
To Share Forfeited A/c |
|
|
|
12,500 |
|
|
( 2,500 shares forfeited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (2,500×8) |
Dr. |
|
20,000 |
|
|
|
Share Forfeited A/c (2,500×2) |
Dr. |
|
5,000 |
|
|
|
To Equity Share Capital A/c (2,500×10) |
|
|
|
25,000 |
|
|
(Share reissued @Rs 8 per share fully paid-up) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Forfeited A/c (12,500 – 5,000) |
Dr. |
|
7,500 |
|
|
|
To Capital Reserve A/c |
|
|
|
7,500 |
|
|
( Profit on reissue transferred to Capital Reserve) |
|
|
|
|
Working Notes:
WN 1: Calculation of Amount unpaid on Allotment
Amount received on application (5,000×3) = 15,000
Less: Amount adjusted on application (2,500×3) = 7,500
Excess amount received on application = 7,500
Amount due on allotment (2,500×4.5)= 11,250
Amount unpaid on allotment = 3,750 (11,250 – 7,500)
Note:
Rs 7,500 received on application will be transferred to allotment, but first of all we have to transfer such amount to Capital A/c and rest would be transferred to Securities Premium A/c. Capital on allotment is Rs 5,000 (2,500×2) that is fully received and balance amount of advance Rs 2,500 will be transferred to Securities Premium A/c. So, amount of premium unpaid is Rs 3,750 (2,500×2.5 –2,500).
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|
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