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Question -

Ashoka Limited Company which had issued equity shares of Rs.20 each at a premium of Rs. 4 per share, forfeited 1,000 shares for non-payment of final call of Rs.2 per share. 400 of the forfeited shares were reissued at Rs.14 per share out of the remaining shares of 200 shares reissued at Rs.20 per share. Give journal entries for the forfeiture and reissue of shares and show the amount transferred to capital reserve and the balance in Share Forfeiture Account.



Answer -

 

Books of Ashoka Limited

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Share Capital A/c

Dr.

20,000

To Final Call A/c

2,000

To Share Forfeiture A/c

18,000

(1,000 Shares of 20 per share forfeited for nonpayment of Share Final

Call money @ ₹2 per share)

Bank A/c (400×14)

Dr.

5,600

Share Forfeiture A/c (400×6)

Dr.

2,400

To Share Capital A/c

8,000

(400 shares @ ₹20 per share reissued for ₹14 per share fully

paid-up)

Bank A/c

Dr.

4,000

To Share Capital A/c

4,000

(200 shares @ ₹20 per share reissued for ₹20 per share fully

paid-up)

Share Forfeiture A/c

Dr.

8,400

To Capital Reserve

8,400

(Balance of 600 shares in Share Forfeiture Account transferred to

Capital Reserve Account, after reissue)

Balance in ShareForfeiture Account (18,000 – 10,800) = ₹ 7,200

WorkingNotes:

For 400 Shares

Share Forfeiture Account credited

₹18 per share

Less: Share Forfeiture Account debited

₹6 per share

Amount  transferred to Capital Reserve Account, after adjustment

₹12 per share

Amount of 400 sharestransferred to Capital Reserve Account, after reissue

= 400 Shares @ ₹12 per share

= ₹ 4,800

For 200 Shares

Share Forfeiture Account credited

₹18 per share

Less: Share Forfeiture Account debited

Nil

Amount  transferred to Capital Reserve Account, after adjustment

₹18 per share

Amount of 200 sharestransferred to Capital Reserve Account, after reissue

= 200 Shares @ ₹ 18per share

= ₹3,600

Total amount transferred to Capital Reserve Account for 600 shares

= Capital Reserve for 400 shares + Capital Reserve for 200 shares

= 4,800 + 3,600

= ₹8,400

 

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