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Question
Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
Vipin Ltd. forfeited 10,000 shares of ₹ 10 each issued at a premium of ₹ 1 per share, for non- payment of second and final call of ₹ 2 per share. Out of these, 60% of the shares were reissued ₹ 7 per share fully paid-up.
Solution
| In the Books of Vipin Ltd. Journal |
||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 1. | Share Capital A/c (10,000 × ₹10) ...Dr. | 1,00,000 | ||
| To Share Second & Final Call A/c (10,000 × ₹2) | 20,000 | |||
| To Share Forfeiture A/c | 80,000 | |||
| (Being 10,000 shares forfeited for non-payment of second and final call money) | ||||
| 2. | Bank A/c (6,000 × ₹7) ...Dr. | 42,000 | ||
| Share Forfeiture A/c (6,000 × ₹ 3) ...Dr. | 18,000 | |||
| To Share Capital A/c (6,000 × ₹ 10) | 60,000 | |||
| (Being 6,000 forfeited shares reissued at ₹ 7 per share fully paid - up) | ||||
| 3. | Share Forfeiture A/c ...Dr. | 30,000 | ||
| To Capital Reserve A/c | 30,000 | |||
| (Being profit on reissue of 6,000 forfeited shares transferred to Capital Reserve Account) | ||||
Working Note:
Profit on 10,000 shares = ₹ 80,000
Profit on 6,000 shares = ` ₹ 80,000 xx (6,000)/(10,000)`
= ₹ 48,000
Loss on Reissue of 6,000 shares = 6,000 × ₹ 3 = ₹ 18,000
Profit on Reissue of shares transferred to Capital Reserve = ₹ 48,000 - ₹ 18,000
= ₹ 30,000
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