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Question
Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) Basak Ltd. forfeited 20 shares of ₹ 10 each, ₹ 7 called-up on which the shareholder had paid application and allotment money of ₹ 5 per share. Out of these, 15 shares were reissued to Naresh as ₹ 7 per share paid-up for ₹ 8 per share.
(ii) Y Ltd. forfeited 90 shares of ₹ 10 each, ₹ 8 called-up issued at a premium of ₹ 2 per share to 'R' for non-payment of allotment money of ₹ 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as ₹ 8 called-up for ₹ 10 per share.
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
(i) |
Share Capital A/c (20 Shares × 7) |
Dr. |
|
140 |
|
|
|
|
To Share Forfeiture A/c (20 Shares × 5) |
|
|
|
100 |
|
|
|
To Calls-in- Arrears A/c (20 Shares × 2) |
|
|
|
40 |
|
|
|
(20 Shares of Rs 10 each, Rs 7 called-up forfeited for the non-payment of call) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (15 Shares × 8) |
Dr. |
|
120 |
|
|
|
|
To Share Capital A/c (15 Shares × 7) |
|
|
|
105 |
|
|
|
To Securities Premium A/c (15 Shares × 1) |
|
|
|
15 |
|
|
|
(15 shares were reissued as Rs 7 paid-up for Rs 8 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Forfeiture A/c (15 Shares × 5) |
Dr. |
|
75 |
|
|
|
|
To Capital Reserve A/c |
|
|
|
75 |
|
|
|
(Transfer of profit on re-issue of 15 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii) |
Share Capital A/c (90 Shares × 8) |
Dr. |
|
720 |
|
|
|
|
Securities Premium A/c (90 Shares × 2) |
Dr. |
|
180 |
|
|
|
|
To Share Forfeiture A/c (90 Shares × 5) |
|
|
|
450 |
|
|
|
To Share Allotment A/c (90 Shares × 5) |
|
|
|
450 |
|
|
|
(Shares forfeited for non-payment of allotment) |
|
|
|
|
|
|
|
Bank A/c (80 Shares × 10) |
Dr. |
|
800 |
|
|
|
|
To Share Capital A/c (80 Shares × 8) |
|
|
|
640 |
|
|
|
To Securities Premium A/c (80 Shares × 2) |
|
|
|
160 |
|
|
|
(80 shares were reissued for Rs 10, Rs 8 called-up) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Forfeiture A/c (80 Shares × 5) |
Dr. |
|
400 |
|
|
|
|
To Capital Reserve A/c |
|
|
|
400 |
|
|
|
(Transfer of profit on re-issue of 80 shares) |
|
|
|
|
|
Working Notes-
Note 1
Profit on forfeiture of 20 shares = 100
Profit on forfeiture of 15 shares=`100/20 xx 15` = Rs 75
Share forfeiture (Cr.) = Rs 75
Share Forfeiture (Dr.) = Nil
Capital Reserve = Rs 75
Note 2
Profit on forfeiture of 90 shares = Rs 450
Profit on forfeiture of 80 shares = `450/90 xx 80`= Rs 400
Share forfeiture (Cr.) = Rs 400
Share forfeiture (Dr.) = Nil
Capital Reserve = Rs 400
APPEARS IN
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Answer in one Sentence only :
Give the full form of SEBI.
(Forfeiture of shares issued at premium)
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State, whether the following statements is True or False.
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Short Answer Question
When can shares be Forfeited?
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Z and Co. forfeited 100 shares of ₹ 10 each for non-payment of the final call of ₹ 2 per share. All the forfeited shares were re-issued at ₹ 9 per share. What amount will be transferred to Capital Reserve A/c?
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Which of the following statement is false?
When forfeited shares are re-issued the amount of discount allowed on these shares cannot exceed ______.
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Pass entries for forfeiture and re-issue in the following case.
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Radhe Ltd. forfeited 500 shares of ₹ 10 each fully called up for non-payment of final call of ₹ 3 per share. 300 of these shares were reissued at ₹ 8 per share as fully paid-up. The amount credited to Capital Reserve Account was:
A Company forfeited 1,000 shares of ₹ 10 each, ₹ 7 called up for non-payment of first call of ₹ 2 per share. All these shares were reissued at ₹ 5 per share ₹ 7 paid-up. The amount transferred to Capital Reserve Account was:
Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
Deepak Ltd. forfeited 800 shares of ₹ 10 each, ₹ 8 per share called up, for non-payment of first call of ₹ 3 per share. All the forfeited shares were reissued for ₹ 12 per share fully paid.
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.
