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Question
Sukanya Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each. The shares were issued at a premium of ₹ 20 per share. The amount was payable as follows:
| On Application and Allotment | -- | ₹ 14 per share (including premium of ₹ 10), |
| On First Call | -- | ₹ 8 per share (including premium of ₹ 5), |
| On Final Call | -- | ₹ 8 per share (including premium of ₹ 5). |
Applications for 96,000 shares were received. Rohit , a shareholder holding 7,000 shares, failed to pay both the calls and Namit , a holder of 5,000 shares , did not pay the final call.
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.
Pass necessary journal entries for the above transactions in the books of Sukanya Ltd.
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
Bank A/c (96,000×14) |
Dr. |
|
13,44,000 |
|
|
|
To Equity Share Application and Allotment A/c |
|
|
|
13,44,000 |
|
|
( Application money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Application and Allotment A/c |
Dr. |
|
13,44,000 |
|
|
|
To Equity Share Capital A/c (96,000×4) |
|
|
|
3,84,000 |
|
|
To Security Premium Reserve A/c (96,000×10) |
|
|
|
9,60,000 |
|
|
(Application money adjusted to Share Capital) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share First Call A/c (96,000×8) |
Dr. |
|
7,68,000 |
|
|
|
To Equity Share Capital A/c (96,000×3) |
|
|
|
2,88,000 |
|
|
To Security Premium Reserve A/c (96,000×5) |
|
|
|
4,80,000 |
|
|
(First call money due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (7,68,000 – 56,000) |
Dr. |
|
7,12,000 |
|
|
|
To Equity Share First Call A/c |
|
|
|
7,12,000 |
|
|
(First call money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Second Call A/c (96,000×8) |
Dr. |
|
7,68,000 |
|
|
|
To Equity Share Capital A/c (96,000×3) |
|
|
|
2,88,000 |
|
|
To Security Premium Reserve A/c (96,000×5) |
|
|
|
4,80,000 |
|
|
(Second call money due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (7,68,000 – 56,000 – 40,000) |
Dr. |
|
6,72,000 |
|
|
|
To Equity Share Second Call A/c |
|
|
|
6,72,000 |
|
|
(Second call money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Share Capital A/c |
Dr. |
|
1,20,000 |
|
|
|
Security Premium Reserve A/c (7,000×10 + 5,000×5) |
Dr. |
|
95,000 |
|
|
|
To Equity Share First Call A/c |
|
|
|
56,000 |
|
|
To Equity Share Second Call A/c |
|
|
|
96,000 |
|
|
To Shares Forfeited A/c (7,000×4 + 5,000×7) |
|
|
|
63,000 |
|
|
(Shares Forfeited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (8,000×8) |
Dr. |
|
64,000 |
|
|
|
Shares Forfeited A/c (8,000×2) |
Dr. |
|
16,000 |
|
|
|
To Equity Share Capital A/c |
|
|
|
80,000 |
|
|
(Shares Reissued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Forfeited A/c |
Dr. |
|
19,000 |
|
|
|
To Capital Reserve A/c |
|
|
|
19,000 |
|
|
(Profit on Reissue transferred to Capital Reserve A/c) |
|
|
|
|
Working Notes:
WN1: Amount transferred to Capital Reserve
Amount forfeited on reissued shares of Rohit = Rs 28,000
Amount forfeited on reissued shares of Namit
= `"Amount Forfeited" xx "Shares Re-issued"/"Shares Forfeited" `
`= 35000 xx 1000/5000 = 7000`
Total amount forfeited on reissued shares = 28,000 + 7,000 = Rs 35,000
Amount transferred to Capital Reserve = 35,000 – 16,000 = Rs 19,000
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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Short Answer Question
When can shares be Forfeited?
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Give necessary journal entries:
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---- |
₹ 5 per share(including premium), |
| On first and final call |
---
|
Balance. |
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On Allotment: ₹ 15 per share (including premium ₹ 5)
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Money received in advance from shareholders before it is actually called-up by the directors is ______.
Those companies whose shares are listed on a recognised stock exchange for public trading ______.
When a company repurchase its own share from the market to reduce the number of share it is called ______.
Which of the following is a free reserve?
Apaar Ltd forfeited 4,000 shares of ₹20 each, fully called up, on which only application money of ₹6 has been paid. Out of these 2,000 shares were reissued and ₹8,000 has been transferred to capital reserve. Calculate the rate at which these shares were reissued.
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| 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:
Vishnu Ltd. forfeited 20 shares of ₹10 each, ₹8 called up, on which John had paid application and allotment money of ₹5 per share, of these, 15 shares were reissued to Parker as fully paid up for ₹6 per share. What is the balance in the share Forfeiture Account after the relevant amount has been transferred to Capital Reserve Account?
Shares can be forfeited for?
If a share of ₹ 10 on which ₹ 8 has been called and ₹ 6 has been paid is forfeited, the Share Capital Account should be debited with:
Balance of Forfeited Shares Account after reissue of forfeited shares is transferred to ______.
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:
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.
Lilly Ltd. forfeited 100 shares of ₹ 10 each issued at 10% premium (₹ 8 called up ) on which a shareholder did not pay ₹ 3 of allotment (including premium) and first call of ₹ 2. Out of these 60 shares were reissued to Ram as fully paid for ₹ 8 per share and 20 shares to Suraj as fully paid up @ ₹ 12 per share at different intervals of time.
Prepare Share Forfeiture account.
MV Ltd. was registered with a capital of ₹ 2,00,000 divided into 10,000 Equity shares of ₹ 20 each payable as follows:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 7 per share |
| On First & Final Call | ₹ 8 per share |
The company offered 5,000 shares to the public for subscription. It received applications for 6,700 shares.
From amongst the applicants:
- Vimal, who had applied for 1,500 shares, paid ₹ 7,500 on application, but was allotted only 800 shares.
- Abhay, who had applied for 2,000 shares, paid the full amount of ₹ 40,000 with his application, but was allotted only 1,000 shares.
- Nitin, who had applied for and allotted 500 shares, did not pay the allotment and call money when due.
- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Abhay was used towards allotment and call and any surplus beyond the call was refunded.
The company forfeited Nitin's shares after the final call.
You are required to pass journal entries to record the above transactions in the books of the company.
Roxy Ltd. issued Equity shares of 10 each payable as:
₹ 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.
