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Question
The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per share , for the non-payment of the first call money of ₹ 2 per share . The final call of ₹ 2 per share has not been made. Half the forfeited shares were reissued at ₹ 1,500 as fully paid-up. Record the journal entries for the forfeiture and reissue of shares.
Solution
Journal Entries
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Share Capital A/c (300 × 8) |
Dr. |
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2,400 |
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To Share Forfeiture A/c (300 × 6) |
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1,800 |
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To Calls-In-Arrears (300 × 2) |
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600 |
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(300 shares of Rs 10 each on which Rs 8 had called, forfeited for non-payment Rs 2 per share) |
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Bank A/c |
Dr. |
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1,500 |
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To Share Capital A/c |
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1,500 |
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(150 shares of Rs 10 each re-issued for the sum of Rs 1,500) |
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Share Forfeiture A/c |
Dr. |
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900 |
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To Capital Reserve A/c |
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900 |
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(Balance in Share Forfeiture Account of 150 re-issued shares, transferred to Capital Reserve) |
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Working Notes
Share Forfeiture of Re-issued Shares
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Share Forfeiture (at the time of forfeiture) |
Cr. |
6 |
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Less: Share Forfeiture (at the time of re-issue) |
Dr. |
NIL |
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Balance in Share Forfeiture after re-issue |
Cr. |
6 |
per share |
Capital Reserve = Balance in Share Forfeiture after reissue (per share) × Number of Shares Reissued
= Rs 6 × 150
= Rs 900
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Short Answer Question
When can shares be Forfeited?
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Based on the below information, you are required to answer the following question:
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Nidiya Limited was incorporated on 1st April 2017 with a registered office in Mumbai. The capital clause of the memorandum of Association reflected a registered capital of 8,00,000 equity shares of ₹ 10 each and 1,00,000 preference shares of ₹ 50 each. Since some large investments were required for building and machinery the company in consultation with vendors, M/s VPS Enterprises, issued 1,00,000 equity shares and 20,000 preference shares at par with them in full consideration of assets acquired. Besides this, the company issued 2,00,000 equity shares for cash at par payable as ₹ 3 on application, 2 on the allotment, 3 on the first call and 2 on the second call. Till date, the second call has not yet been made and all the shareholders have paid except Mr. Ajay who did not pay allotment and calls on his 300 shares and Mr. Vipul who did not pay the first call on his 200 shares. Shares of Mr. Ajay were then forfeited and out of the 100 shares were reissued at ₹ 12 per share. |
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Pass entries for forfeiture and re-issue in the following case.
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Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
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