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Question
Show the forfeiture and reissue entries under each of the following cases:
(i) X Ltd. forfeited 300 shares of ₹ 10 each, ₹ 8 called-up held by Mr. A for non-payment of second call money of ₹ 3 per share. These shares were reissued to Mr. Z for ₹ 10 per share as fully paid-up.
(ii) Y Ltd. forfeited 400 shares of ₹ 10 each, fully called-up, held by Mr. B for non-payment of final call money of ₹ 4 per share. These shares were reissued to Mr. T at ₹ 12 per share as fully paid-up.
(iii) Light Ltd. forfeited 250 shares of ₹ 10 each, fully called-up held by Mr. C for non-payment of allotment money of ₹ 3 per share and first and final call money of ₹ 4 per share. These shares were reissued @ ₹ 8 per share as fully paid-up to Mr. P.
Solution
(i)
Books of X Limited
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
||
|
|
Share Capital |
Dr. |
|
2,400 |
|
|
|
|
To Share Forfeiture A/c |
|
|
1,500 |
||
|
|
To Calls-in-Arrears A/c |
|
|
900 |
||
|
|
(300 shares of ₹ 10 each on which had called ₹ 8, forfeited for non-payment of second call ₹ 3 per share) |
|
|
|
||
|
|
|
|
|
|
||
|
|
Bank A/c |
Dr. |
|
3,000 |
|
|
|
|
To Share Capital A/c |
|
|
3,000 |
||
|
|
(300 shares of ₹ 10 each re-issued) |
|
|
|
||
|
|
|
|
|
|
||
|
|
Share Forfeiture A/c |
Dr. |
|
1,500 |
|
|
|
|
To Capital Reserve A/c |
|
|
1,500 |
||
|
|
(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve) |
|
|
|
||
Working Notes-
|
Share Forfeiture Credit (at the time of forfeiture of shares) |
1,500 |
|
Less: Share Forfeiture Debit (at the time of re-issue shares) |
NIL |
|
Balance in Share Forfeiture after re-issue of shares |
1,500 |
Capital Reserve = Balance in Share Forfeiture of re-issued shares
= ₹ 1,500
(ii)
Books of Y Limited
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
|
Share Capital A/c |
Dr. |
|
4,000 |
|
|
|
To Share Forfeiture A/c |
|
|
2,400 |
|
|
|
To Calls-in-Arrears A/c |
|
|
1,600 |
|
|
|
(400 shares of ₹ 10 forfeited for the non-payment of final call ₹ 4 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
4,800 |
|
|
|
To Share Capital A/c |
|
|
4,000 |
|
|
|
To Securities Premium A/c |
|
|
800 |
|
|
|
(400 shares of ₹10 each re-issued at ₹ 12 per share as fully paid-up) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Forfeiture A/c |
Dr. |
|
2,400 |
|
|
|
To Capital Reserve A/c |
|
|
2,400 |
|
|
|
(Balance of Share Forfeiture after re-issue transferred to Capital Reserve) |
|
|
|
|
Working Notes-
|
Share Forfeiture Credit (at the time of forfeiture of shares) |
2,400 |
|
Less: Share Forfeiture Debit (at the time of re-issue shares) |
NIL |
|
Balance in Share Forfeiture after re-issue of shares |
2,400 |
Capital Reserve = Balance in Share Forfeiture of re-issued shares
= ₹ 2,400
(iii)
Books of Light Limited
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
||
|
|
Share Capital A/c |
Dr. |
|
2,500 |
|
|
|
|
To Share Forfeiture A/c (250×3) |
|
|
750 |
||
|
|
To Calls-in-Arrears A/c |
|
|
1,750 |
||
|
|
(250 shares of ₹ 10 each forfeited for the non-payment ₹ 7 per share) |
|
|
|
||
|
|
|
|
|
|
||
|
|
Bank A/c |
Dr. |
|
2,000 |
|
|
|
|
Share Forfeiture A/c |
Dr. |
|
500 |
|
|
|
|
To Share Capital A/c |
|
|
2,500 |
||
|
|
(250 shares of ₹ 10 each re-issued for ₹ 8 per share as fully paid-up ) |
|
|
|
||
|
|
|
|
|
|
||
|
|
Share Forfeiture A/c |
Dr. |
|
250 |
|
|
|
|
To Capital Reserve A/c |
|
|
250 |
||
|
|
(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve) |
|
|
|
||
Working Notes-
|
Share Forfeiture Credit (at the time of forfeiture of shares) |
750 |
|
Less: Share Forfeiture Debit (at the time of re-issue shares) |
500 |
|
Balance in Share Forfeiture after re-issue of shares |
250 |
Capital Reserve = Balance in Share Forfeiture of re-issued shares = ₹ 250
APPEARS IN
RELATED QUESTIONS
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Long Answer Question
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Pass necessary journal entries in the books of the company for the following transactions:
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Shares of Rohit and Namit were forfeited . Of the forfeited shares 8,000 shares including all the shares of Rohit were reissued to Reena at ₹ 8 per share fully paid-up.
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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.
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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)
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(i) To applicants for 80,000 shares – 80,000 shares.
(ii) To applicants for 40,000 shares – nil
(iii) The balance of the applicants were allotted shares on a pro-rata basis.
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.
Share Forfeiture account is a ________.
The balance of share forfeited account after the reissue of forfeited shares is transferred to ______.
Mohit had been allotted for 600 shares by a Govinda Ltd on pro-rata basis which had issued two shares for every three applied. He had paid application money of ₹3 per share and could not pay allotment money of ₹5 per share. First and final call of ₹2 per share was not yet made by the company. His shares were forfeited. the following entry will be passed:
| Equity Share Capital A/c | Dr. | ₹X | |
| To share Forfeited A/c | ₹Y | ||
| To Equity Share Allotment A/c | ₹Z |
Here X, Y and Z are:
Shares can be forfeited for?
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 ______.
Which of the following statement is false?
If 400 shares of ₹ 100 issued at a premium of ₹ 30 on which the full amount has been called and ₹ 80 (including premium) have been received are forfeited, the share forfeiture account should be credited with ______.
Pass entries for forfeiture and re-issue in the following case.
Ratan Ltd. forfeited 3,000 shares of ₹ 10 each (issued at ₹ 2 premium) for non-payment of first call of ₹ 2 per share. Final call of ₹ 3 per share was not yet made. Out of these 2,000 shares were re-issued at ₹ 10 per share as fully paid.
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.
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?
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?
