Question

The Subscribed Capital of Parag Limited is 30,000 equity shares of ₹ 100 each and 50,000 preference shares of ₹ 100 each. On both of these shares ₹ 80 per share were called-up.

The Directors forfeited 500 equity shares held by Ashish who failed to pay First and Second Call each of ₹ 20 per share. They also forfeited 500 preference shares of Ashok who failed to pay ₹ 20 per share on Allotment, ₹ 20 per share on First call and ₹ 20 per share on Second call.

The Director re-issued these forfeited shares of Ashish at ₹ 60 per share, ₹ 80 paid up and those of Ashok at ₹ 72 per share ₹ 80 paid up. All re-issued shares were taken up by Anagha.

Pass Journal entries to record the forfeiture and re-issue of shares in the books of Parag Ltd.

Answer 1

In the books of Parag Ltd.
Date	Particular	L.F.	Amount Dr. (₹)	Amount Cr. (₹)
1	Equity Share Capital A/c   ...Dr.		40,000	-
	To Equity Share First Call A/c		-	10,000
	To Equity Share Second Call A/c		-	10,000
	To Equity Share Forfeiture A/c		-	20,000
	(Being forfeiture of 500 equity share for failure to pay first and second call)
2	Preference Share Capital  ...Dr.		40,000	-
	To Preference Share Allotment A/c		-	10,000
	To Preference Share First Call A/c		-	10,000
	To Preference Share Second Call A/c		-	10,000
	To Preference Share Forfeiture A/c		-	10,000
	(Being forfeiture of 500 preference shares due to non-payment of allotment money first call and second call money)
3	Bank A/c      ...Dr.		30,000	-
	Equity Share Forfeiture A/c      ...Dr.		10,000	-
	To Equity Share Capital A/c		-	40,000
	(Being re-issue of 500 forfeited shares ₹ 60 per share due)
4	Bank A/c   ...Dr.		36,000	-
	Preference Share Forfeiture A/c   ...Dr.		4,000	-
	To Preference Share Capital A/c		-	40,000
	(Being re-issued 500 forfeited preference shares ₹ 72 Per share)
5	Equity Share Forfeiture A/c   ...Dr.		10,000	-
	Preference Share Forfeiture A/c   ...Dr.		6,000	-
	To Capital Reserve A/c		-	16,000
	(Being balance of share forfeiture account transferred to capital  reserve)