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Question
On 1st May,2014, Directors of a Limited Company forfeited 200 shares of ₹ 20 each , ₹ 15 per share called-up, on which ₹ 10 per share has been paid by A , the amount of the first call of ₹ 5 per share being unpaid . Ten days Later, the Directors reissued the forfeited shares to B credited as ₹ 15 per share paid-up , for a payment of ₹ 10 per share.
Give journal entries in the company's books to record the forfeited shares and their reissue.
Solution
Journal Entries
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
2014 |
|
|
|
|
|
|
May 01 |
Share Capital A/c (15 × 200) |
Dr. |
|
3,000 |
|
|
|
To Share Forfeiture A/c (10 × 200) |
|
|
2,000 |
|
|
|
To Calls-in-Arrears A/c (5 × 200) |
|
|
1,000 |
|
|
|
(200 shares of Rs 20 each, Rs 15 called-up forfeited for the non-payment Rs 5 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
May 11 |
Bank A/c (10 × 200) |
Dr. |
|
2,000 |
|
|
|
Share Forfeiture A/c (5 × 200) |
Dr. |
|
1,000 |
|
|
|
To Share Capital A/c (15 × 200) |
|
|
3,000 |
|
|
|
(200 shares of Rs 20 each re-issued at Rs 10 each, Rs 15 paid-up) |
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|
|
|
|
|
|
|
|
|
|
|
May 11 |
Share Forfeiture A/c |
Dr. |
|
1,000 |
|
|
|
To Capital Reserve A/c |
|
|
1,000 |
|
|
|
(Balance in share forfeiture after re-issue transferred to Capital Reserve) |
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|
|
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Working Note-
|
Share Forfeiture Credit (at the time of forfeiture) |
2,000 |
|
Less: Share Forfeiture Debit (at the time of re-issue) |
1,000 |
|
Balance in Share Forfeiture Account after re-issue |
1,000 |
Capital Reserve = Balance in Share Forfeiture Account after re-issue = Rs 1,000
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Short Answer Question
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---- |
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---
|
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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?
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₹ 4 on Application and Allotment; ₹ 2 on First Call; ₹ 4 on Second and Final Call.
Following is an extract of the Journal of Roxy Ltd.
| Journal of Roxy Ltd. (an extract) | ||||
| Date | Particulars | L. F. | Dr. (₹) | Cr. (₹) |
| 1. | Share First Call A/c ...Dr. | 28,000 | ||
| To Share Capital A/c | 28,000 | |||
| (Being first call due on ___??___ shares @ ₹ 2 each) | ||||
| 2. | Bank A/c ...Dr. | ?? | ||
| Calls in arrears A/c ...Dr. | 2,000 | |||
| To Share First Call A/c | 28,000 | |||
| (Being first call received on ___??___ shares) | ||||
| 3. | Share Capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | 4,000 | |||
| To Calls in Arrears A/c | ?? | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non-payment of first call) | ||||
| 4. | Share Second & Final Call A/c ...Dr. | 52,000 | ||
| To Share capital A/c | 52,000 | |||
| (Being second & final call due on ___??___ shares @ ₹ 4 each) | ||||
| 5. | Bank A/c ...Dr. | ?? | ||
| Calls in Arrears A/c ...Dr. | 10,000 | |||
| To Share Second & Final Call A/c | 52,000 | |||
| (Being second call received on ___??___ shares) | ||||
| 6. | Share capital A/c ...Dr. | ?? | ||
| To Shares Forfeited A/c | ?? | |||
| To Calls in Arrears A/c | 10,000 | |||
| (Being ___??___ shares of ₹ 10 each forfeited for non payment of final call) | ||||
| 7. | Bank A/c ...Dr. | ?? | ||
| Share Forfeited A/c ...Dr. | ?? | |||
| To Share Capital A/c | ?? | |||
| (Being 1,500 forfeited shares including those on which the first call was not received reissued @ ₹ 6 per shares fully called) | ||||
| 8. | Share Forfeiture A/c (1,000 × 0) + (500 × 2) ...Dr. | ?? | ||
| To Capital Reserve A/c | ?? | |||
| (Being ___??___) | ||||
You are required to complete the journal entries by filling up the missing information represented by '??', including the number of shares and narration, if any.
Assertion: A company can reissue a forfeited share at an amount which is less than the amount not received on it.
Reason: A company can write off the net loss made on the reissue of a forfeited share from its capital reserve.
Which one of the following is correct?
Hero Ltd. was registered with a capital of ₹ 5,00,000 divided into 20,000 shares of ₹ 25 each, payable as:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 10 per share |
| On Call | The Balance |
The company offered to the public for subscription 10,000 shares. It received applications for 11,100 shares.
From amongst the applicants:
- Vimal, who had applied for 1,200 shares, paid ₹ 6,000 on application. but was allotted only 600 shares.
- Mohan applied for 1,000 shares, paid the full amount of ₹ 25,000 with his application but was allotted only 500 shares.
- Vineet, who had applied for 1,500 shares, paid his application and allotment money in order but did not pay the call money.
- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Mohan was used towards allotment and call and any surplus beyond the call was refunded. The company forfeited Vineet’s shares and later re-issued 500 of the forfeited shares @ ₹ 20 per share fully paid up.
You are required to pass journal entries in the books of Hero Ltd.
