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Question
Record the journal entries for forfeiture and reissue of shares in the following cases:
a. X Ltd. forfeited 20 shares of Rs 10 each, Rs 7 called upon which the shareholder had paid application and allotment money of Rs 5 per share. Out of these, 15 shares were re-issued to Naresh as Rs 7 per share paid up for rs 8 per share.
b. Y Ltd. forfeited 90 shares of Rs 10 each, Rs 8 called up issued at a premium of Rs 2 per share to 'R' for nonpayment of allotment money of Rs 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as `8 called up for Rs 10 per share.
c. Z Ltd. forfeited 300 shares of Rs 10 each issued at a discount of Rs 1 per share for non-payment of first and final call of Rs 3 per share. Out of these 200 shares were reissued at Rs 3 per share fully paid up.
Solution
| Journal | ||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
(a)
|
Share Capital A/c (20 Shares x 7) Dr. To Share Forfeiture A/c (20 Shares x 5) To Calls-in-Arrears A/c (20 Shares x 2) (Being 20 Shares of Rs10 each, Rs7 called-up forfeited for the nonpayment of call) |
140
|
100 40
|
|
|
Bank A/c (25 Shares x 8) Dr. To Share Capital A/c (15 Shares x 7) To Share Premium (15 shares x 1) To Bank A/c (WN1) (Being 15 Shares were reissued as Rs 7 paid-up for Rs 8 per share) |
120
|
105 15
|
||
|
Share Forfeiture A/c Dr. To Capital Reserve A/c (Being transfer of Profit on Re-issue of 15 Shares) |
75
|
75
|
||
|
(b)
|
Share Capital A/c (90 Shares x 8) Dr. Securities Premium A/c (90 Shares x 2) Dr. To Share Forfeiture A/c (90 Shares x 5) To Share Allotment A/c (90 Shares x 5) (Being shares Forfeited for Nonpayment of Allotment) |
720 180
|
450 450
|
|
|
Bank A/c (80 Shares x 10) Dr. To Share Capital A/c (80 Shares x 8) To Share Premium A/c (80 Shares x 2) (Being share were reissued for Rs 10, Rs 8 called-up) |
800
|
640 160
|
||
|
Share Forfeiture A/c Dr. To Capital Reserve A/c (Being transfer of Profit on re-issue of 80 Shares) |
400
|
400
|
||
|
(c)
|
Share Capital A/c (300 Shares x 10) Dr. To Share Forfeiture A/c (300 Shares x 6) To Discount on Issue of Shares A/c (300 shares x 1) To Share First and Final Call A/c (300 Shares x 3) (Being Shares forfeited for nonpayment of First and final Call) |
3,000
|
1,800 300 900
|
|
|
Bank A/c (200 Shares x 3) Dr. Discount on Issue of Shares A/c (200 Shares x 2) Dr. Share Forfeiture A/c (200 Shares x 6) Dr. To Share Capital A/c (200 Shares x 10) (Being 200 Shares were reissued for Rs 3 per share, fully called-up) |
600 200 1,200
|
2,000
|
||
RELATED QUESTIONS
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On Allotment Rs.6 per share (including premium Rs.3 per share)
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Pass necessary journal entries for the above transactions in the books of KS Ltd.
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On Application and Allotment - Rs.85 per share (including premium)
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Pass necessary journal entries for the above transactions in the books of AB Ltd.
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Pass necessary Journal Entries for the above transactions in the books of the company.
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On application and allotment - Rs 4 per share
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On 30,000 shares - Full amount
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Pass necessary Journal Entries in the books of the company for the above transactions.
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On application - Rs 75 per share (including Rs 50 premium)
On allotment - The balance
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Pass necessary journal entries for the above transaction in the books of the company.
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Pass necessary journal entries for the above transactions in the books of 'Kalyan Limited'
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Pass necessary journal entries for the above transactions in the books of X Ltd.
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Pass necessary journal entries for the above transactions in the books of the company.
Give one word / Term / phrase for the following statement :
The account to which excess amount on share forfeited a/c is transferred.
X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made . The forfeited shares were reissued for ₹ 90 per share , ₹ 75 paid-up. Journalise the above.
Sunshine Ltd. issued 20,000 shares of ₹ 100 each payable ₹ 25 per share on application , ₹ 25 per share on allotment and the balance in two calls of ₹ 25 each. The company did not make the final call of ₹ 25 per share. All the money was duly received with the exception of the amount due on the first call on 400 shares held by Mr. Modi. The Board of Directors forfeited these shares and subsequently reissued them @ ₹ 75 per share paid-up for a sum of ₹ 28,000.
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Give necessary journal entries:
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Pass journal entries in the following cases:
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Pass journal entries to record the forfeiture and reissue of shares.
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.
Choose the appropriate alternative from the given options:
Vanya Ltd. forfeited 20,000 equity shares of ₹ 100 each for non-payment of first and final call of ₹ 40 per share. The maximum amount of discount at which these shares can be re-issued will be:
Concept Stationary Ltd. invited applications for issuing 3,00,000 shares of ₹ 10 each at a premium of ₹ 3 per share. The amounts were payable as follows:
On application and allotment – ₹ 7 per share.
On first & final call – balance (including a premium of ₹ 3)
Applications were received for 4,00,000 shares & allotment was made as follows:
(i) To applicants for 80,000 shares – 80,000 shares.
(ii) To applicants for 40,000 shares – nil
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Excess money received with applications was adjusted towards sums due on the first and final call.
Amit, who belonged to category (i) and was allotted 4,000 shares and Veni, who belonged to category (iii) and was allotted 4,400 shares failed to pay the first and final call money. Their shares were forfeited. The forfeited shares were re-issued at ₹ 7 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.
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%
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Pass the necessary journal entries for the above transactions in the book of DF Ltd.
Share Forfeiture account is a ________.
Capital reserves are created from ______.
If the loss on the re-issue of shares is less than the amount forfeited, the 'surplus' or profit is transferred to:
Discount allowed on re-issue of forfeited shares is debited to ______.
Balance in Share Forfeiture Account is shown in the balance sheet under the head of ______.
Balance of Forfeited Shares Account after reissue of forfeited shares is transferred to ______.
At the time of forfeiture, the share Capital Account is debited 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?
200 equity shares of ₹10 each issued at par were forfeited for non-payment of first call of ₹3 per share. Final call of ₹2 per share was not yet called. By which amount the share capital will be debited on forfeiture?
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?
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?
