Chapter 1 Accounting for Share Capital Solutions

Question - 31 : -
Arushi Computers Ltd. issued 10,000 equity shares of Rs. 100 each at 10% premium. The net amount payable as follows:
On application Rs. 20
On allotment Rs. 50 (Rs. 40 + premium Rs. 10)
On first call Rs. 30
On final call Rs. 10
A shareholder holding 200 shares did not pay final call. His shares were forfeited. Out of these 150 shares were reissued to Ms. Sonia at Rs. 75 per share.
Give journal entries in the books of the company.

Answer - 31 : -

Books of Arushi Computers Ltd.
Date	Particulars			L.F.	Debit Amount (₹)	Credit Amount (₹)
	Bank A/c		Dr.		2,00,000
		To Share Application A/c				2,00,000
	(Share Application money received for 10,000 shares @ ₹20 per share)

	Share Application A/c		Dr.		2,00,000
		To Share Capital A/c				2,00,000
	(Share Application money for 10,000 shares transferred to Share Capital Account)

	Share Allotment A/c		Dr.		5,00,000
		To Share Capital A/c				4,00,000
		To Securities Premium Reserve A/c				1,00,000
	(Allotment money due on 10,000 shares @ ₹40 per share excluding premium ₹10)

	Bank A/c		Dr.		5,00,000
		To Share Allotment A/c				5,00,000
	(Share Allotment money received for 10,000 shares @ ₹50 per share)

	Share First Call A/c		Dr.		3,00,000
		To Share Capital A/c				3,00,000
	(Share First Call money due on 10,000 shares @ ₹30 per share)

	Bank A/c		Dr.		3,00,000
		To Share First Call A/c				3,00,000
	(First Call money received for 10,000 shares @ ₹30 per share)

	Share Final Call A/c		Dr.		1,00,000
		To Share Capital A/c				1,00,000
	(Final Call money due on 10,000 shares @ ₹10 per share)

	Bank A/c		Dr.		98,000
		To Share final call A/c				98,000
	(Final Call money received for 9800 shares @ ₹10 per share and 200 shares failed to pay)

	Share Capital A/c (200 $\times$ 100)		Dr.		20,000
		To Share Final Call A/c (200 $\times$ 10)				2,000
		To Share Forfeiture A/c (200 $\times$ 90)				18,000
	(200 shares forfeited for non-payment of Final Call ₹ 10 per share)

	Bank A/c (150 $\times$ 75)		Dr.		11,250
	Share Forfeiture A/c (150 $\times$ 25)		Dr.		3,750
		To Share Capital A/c (150 $\times$ 100)	Dr.			15,000
	(150 forfeited shares reissued at ₹100 per share for ₹75)

	Share Forfeiture A/c		Dr.		9,750
		To Capital Reserve A/c				9,750
	(Balance of 150 reissue shares after adjustment transferred to Capital Reserve Account)

Working Notes:

Amount Transferred to CapitalReserve A/c

Amount credited to Share Forfeiture	₹ 90 per share
Less: Amount debited to Share Forfeiture	₹25 per share
Balance after adjustment	₹ 65 per share

Amount transferred to Capital Reserve Account = Balance pershare after adjustment ×Number of shares reissued

₹ 9,750 = ₹ 65 × ₹ 150 per share

Question - 32 : -
Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under :

With Application

Rs 3 per share

On allotment (including premium)

Rs 5 per share

On First call

Rs 2 per share

On Second and Final call

Rs 2 per share

Applications were received for 1,60,000 shares. Allotment was made on pro-rata basis. Excess money on application was adjusted against the amount due on allotment.
Rohan, whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs 7 per share.
Record journal entries in the books of the company to record these transactions relating to share capital. Also show the company’s balance sheet.

Answer - 32 : -

Books of Himalaya Company Ltd. Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		4,80,000
	To Share Application A/c				4,80,000
	(Share Application money received for 1,60,000 shares @ Rs 3 per share)

	Share Application A/c	Dr.		4,80,000
	To Equity Share Capital A/c				3,60,000
	To Share Allotment A/c				1,20,000
	(Share Application for 1,20,000 shares @ Rs 3 per share transferred to Share Capital Account and remaining amount adjusted to Allotment)

	Share Allotment A/c	Dr.		6,00,000
	To Equity Share Capital A/c				3,60,000
	To Securities Premium				2,40,000
	(Share Allotment due on 1,20,000 shares @ Rs 5 per share including Rs 2 Securities Premium)

	Bank A/c	Dr.		4,80,000
	To Share Allotment A/c				4,80,000
	(Share allotment for 1,20,000 shares @ Rs 5 per share received)

	Share First Call A/c	Dr.		2,40,000
	To Equity Share Capital A/c				2,40,000
	(Share First Call due on 1,20,000 shares @ Rs 2 per share)

	Bank A/c	Dr.		2,30,400
	To Share First Call A/c				2,30,400
	(Share First Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)

	Share Final Call A/c	Dr.		2,40,000
	To Equity Share Capital A/c				2,40,000
	(Share Final call due on 1,20,000 shares @ Rs 2 per share)

	Bank A/c	Dr.		2,30,400
	To Share Final Call A/c				2,30,400
	(Share Final Call received on 1,15,200 shares @ Rs 2 per share and 4,800 shares failed to pay)

	Equity Share Capital A/c (4,800×10)	Dr.		48,000
	To Share First Call A/c (4,800×2)				9,600
	To Share Final Call A/c (4,800×2)				9,600
	To Share Forfeiture A/c (4,800×6)				28,800
	(4,800 shares forfeited for the non-payment of First Call and Final Call)

	Bank A/c	Dr.		33,600
	Share Forfeiture A/c	Dr.		14,400
	To Equity Share Capital				48,000
	(4,800 shares reissued @ Rs 7 per share, fully paid-up)

	Share Forfeiture A/c	Dr.		14,400
	To Capital Reserve A/c				14,400
	(Share forfeiture balance of 4,800 shares transferred to Capital Reserve Account)

Himalaya Company Limited
Balance Sheet
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	12,00,000
b. Reserves and Surplus	2	2,54,400
2. Non-Current Liabilities
3. Current Liabilities
Total		14,54,400

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	14,54,400
Total		14,54,400

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
1	Share Capital
	Authorised Share Capital
	…….. shares of Rs 10 each		-
	Issued Share Capital
	1,20,000 shares of Rs 10 each		12,00,000
	Subscribed, Called-up and Paid-up Share Capital
	1,20,000 shares of Rs 10 each		12,00,000

2	Reserves and Surplus
	Securities Premium	2,40,000
	Capital Reserve	14,400	2,54,400

3	Cash and Cash Equivalents
	Cash at Bank		14,54,400

Question - 33 : -
Prince Limited issued a prospectus inviting applications for 20,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share payable as follows:

With Application Rs. 2
On Allotment (including premium) Rs. 5
On First Call Rs. 3
On Second Call Rs. 3

Applications were received for 30,000 shares and allotment was made on pro-rata basis. Money overpaid on applications was adjusted to the amount due on allotment.
Mr. Mohit whom 400 shares were allotted, failed to pay the allotment money and the first call, and his shares were forfeited after the first call. Mr. Joly, whom 600 shares were allotted, failed to pay for the two calls and hence, his shares were forfeited.
Of the shares forfeited, 800 shares were reissued to Supriya as fully paid for Rs. 9 per share, the whole of Mr. Mohit’s shares being included.
Record journal entries in the books of the Company and prepare the Balance Sheet.

Answer - 33 : -

Books of Prince Limited Journal
Date	Particulars			L.F.	Debit Amount (₹)	Credit Amount (₹)
	Bank A/c		Dr.		60,000
		To Share Application A/c				60,000
	(Share Application money received on 30,000 shares @₹ 2 per share)

	Share Application A/c		Dr.		60,000
		To Share Capital A/c				40,000
		To Share Allotment A/c				20,000
	(Application money on 20,000 shares transferred to Share Capital Account and the balance adjusted on allotment)

	Share Allotment A/c		Dr.		1,00,000
		To Share Capital A/c				40,000
		To Securities Premium A/c				60,000
	(Allotment money due on 20,000 shares @ ₹5 per share including premium of Rs 3 per share)

	Bank A/c (1,00,000 – 20,000 – 1,600)		Dr.		78,400
		To Share Allotment A/c				78,400
	(Allotment money received)

	Share First Call A/c		Dr.		60,000
		To Share Capital A/c				60,000
	(Share First Call due on 20,000 shares @ ₹3 per share)

	Bank A/c (60,000 – 1,200 – 1,800)		Dr.		57,000
		To Share First Call A/c				57,000
	(First call money received)

	Share Capital A/c		Dr.		2,800
	Securities Premium A/c		Dr.		1,200
		To Share Forfeiture A/c				1,200
		To Share Allotment A/c				1,600
		To Share First Call A/c				1,200
	(400 shares forfeited after first call)

	Share Second Call A/c		Dr.		58,800
		To Share Capital A/c				58,800
	(Final Call money due on 19,600 shares @ ₹3 per share)

	Bank A/c (58,800 – 1,800)		Dr.		57,000
		To Share Second Call A/c				57,000
	(Second Call money received except on 600 shares)

	Share Capital A/c		Dr.		6,000
		To Share Forfeiture A/c				2,400
		To Share First Call A/c				1,800
		To Share Second Call A/c				1,800
	(600 shares forfeited)

	Bank A/c		Dr.		7,200
	Share Forfeiture A/c		Dr.		800
		To Share Capital A/c				8,000
	(800 Shares reissued @ Rs 9 each)

	Share Forfeiture A/c		Dr.		2,000
		To Capital Reserve				2,000

As per the Revised Schedule VI, theBalance Sheet of Prince Limited is as follows:

Prince Limited
Balance Sheet
Particulars	Note No.	Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Fund
a. Share Capital	1	1,98,000
b. Reserves and Surplus	2	61,600
2. Non-Current Liabilities
3. Current Liabilities
Total		2,59,600

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,59,600
Total		2,59,600

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (₹)
1	Share Capital
	Authorised Share Capital
	…….. shares of ₹10 each		-
	Issued Share Capital
	20,000 shares of ₹10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,800 shares of ₹10 each		1,98,000

2	Reserves and Surplus
	Securities Premium	58,800
	Capital Reserve	2,800	61,600

3	Cash and Cash Equivalents
	Cash at Bank		2,59,600

Working Notes:

Money received on Application		(600×2)	1,200
	Less: Utilised on application	(400×2)	(800)
Excess amount received			400

Amount due on Allotment		(400×5)	2,000
	Less: Excess amount received		(400)
Amount due on allotment			1,600

2. Amount to be transferred to Capital Reserve

Amount forfeited on Mohit’s 400 shares		1,200
Amount forfeited on Joly’s 600 shares	2,400
Amount forfeited on Joly’s 400 shares		1,600
		2,800
Less: Discount allowed on 800 shares reissued		(800)
Amount to be transferred to Capital Reserve		2,000

Question - 34 : -
Life machine tools Limited, issued 50,000 equity shares of Rs 10 each at Rs 12 per share, payable at to Rs 5 on application (including premium), Rs 4 on allotment and the balance on the first and final call.

Applications for 70,000 shares had been received. Of the cash received, Rs 40,000 was returned and Rs 60,000 was applied to the amount due on allotment, the balance of which was paid. All shareholders paid the call due, with the exception of one share holder of 500 shares. These shares were forfeited and reissued as fully paid at Rs 8 per share. Journalise the transactions.

Answer - 34 : -

Books of Life machine tools Limited
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c		Dr.		3,50,000
		To Share Application A/c				3,50,000
	(Application money received on application for 70,000 shares @ Rs 5 per share including premium Rs 2)

	Share Application A/c		Dr.		3,50,000
		To Share Capital A/c				1,50,000
		To Securities Premium A/c				1,00,000
		To Share Allotment A/c				60,000
		To Bank A/c				40,000
	(Share Application money for 50,000 shares transferred to Share Capital Account and Securities Premium, Rs 60,000 adjusted to Allotment and Rs 40,000 returned)

	Share Allotment A/c		Dr.		2,00,000
		To Share Capital A/c				2,00,000
	(Share Allotment money due on 50,000 shares @ Rs 4 per share)

	Bank A/c		Dr.		1,40,000
		To Share Allotment A/c				1,40,000
	(Share Allotment money received on share allotment)

	Share First and Final A/c		Dr.		1,50,000
		To Share Capital A/c				1,50,000
	(Share First and Final Call money due on 50,000 shares @ Rs 3 per share)

	Bank A/c		Dr.		1,48,500
		To Share First and Final A/c				1,48,500
	(Share First and Final Call money received from 49,500 shares @ Rs 3 per share and 500 shares failed to pay)

	Share Capital A/c (500×10)		Dr.		5,000
		To Share First and Final Call A/c (500×3)				1,500
		To Share Forfeiture A/c (500×7)				3,500
	(500 shares @ Rs per share fully paid up forfeited for the non- payment of Share First and Final Call Rs 3 per share)

	Bank A/c		Dr.		4,000
	Share Forfeiture A/c		Dr.		1,000
		To Share Capital A/c				5,000
	(500 Shares reissued @ 8 per share fully paid up)

	Share Forfeiture A/c		Dr.		2,500
		To Capital Reserve A/c				2,500
	(Balance of 500 shares in Forfeiture Account after adjustment, transferred to Capital Reserve Account)

Question - 35 : -
The Orient Company Limited offered for public subscription 20,000 equity shares of Rs 10 each at a premium of 10% payable at Rs 2 on application; Rs 4 on allotment including premium; Rs 3 on First Call and Rs 2 on Second and Final call. Applications for 26,000 shares were received. Applications for 4,000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made and all the money were received except the final call on 500 shares which were forfeited. 300 of the forfeited shares were later on issued as fully paid at Rs 9 per share. Give journal entries and prepare the balance sheet.

Answer - 35 : -

Books of Orient Company Limited Journal
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c		Dr.		52,000
		To Share Application A/c				52,000
	(Share Application Money received for 26,000 shares @ Rs 2 per share)

	Share Application A/c		Dr.		52,000
		To Share Capital A/c				40,000
		To Share Allotment A/c				4,000
		To Bank A/c				8,000
	(Application money @ Rs 2 per share of 20,000 shares transferred to Share Capital Account and money of 4,000 shares returned, remaining to Share Allotment)

	Share Allotment A/c		Dr.		80,000
		To Share Capital A/c				60,000
		To Securities Premium A/c				20,000
	(Share Allotment money due on 20,000 shares @ Rs 4 per share including Re 1 Securities Premium)

	Bank A/c		Dr.		76,000
		To Share Allotment A/c				76,000
	(Share Allotment Money received for all the shares after adjustment of money transferred from Share Application)

	Share First Call A/c		Dr.		60,000
		To Share Capital A/c				60,000
	(Share First Call money due on 20,000 share @ Rs 2 per share)

	Bank A/c		Dr.		60,000
		To Share First Call A/c				60,000
	(Share First Call received for 20,000 shares @ Rs 2 per share)

	Share Second and Final Call A/c		Dr.		40,000
		To Share Capital A/c				40,000
	(Share Second and Final Call money due on 20,000 shares @ Rs 2 per share)

	Bank A/c		Dr.		39,000
		To Share Second and Final Call A/c				39,000
	(Share Second and Final Call money received for 19,500 shares @ Rs 2 per share and 500 shares failed to pay)

	Share Capital A/c		Dr.		5,000
		To Share Second and Final Call A/c				1,000
		To Share Forfeiture A/c				4,000
	(500 shares of Rs 10 per share fully called-up forfeited for non-payment of Second and Final Call Rs 2 per share)

	Bank A/c		Dr.		2700
	Share Forfeiture A/c		Dr.		300
		To Share Capital A/c				3,000
	(300 shares @ Rs 10 each reissued for Rs 9 per share fully paid-up)

	Share Forfeiture A/c		Dr.		2,100
		To Capital Reserve A/c				2,100
	(Balance of 300 shares in Share Forfeiture Account transferred to Capital Reserve Account, after adjustment)

Orient Company Limited
Balance Sheet
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	1,99,600
b. Reserves and Surplus	2	22,100
2. Non-Current Liabilities
3. Current Liabilities
Total		2,21,700

II. Assets
1. Non-Current Assets
2. Current Assets
Cash and Cash Equivalents	3	2,21,700
Total		2,21,700

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
1	Share Capital
	Authorised Equity Share Capital
	…….. Equity Shares of Rs 10 each		-
	Issued Equity Share Capital
	20,000 Equity Shares of Rs 10 each		2,00,000
	Subscribed, Called-up and Paid-up Equity Share Capital
	19,800 Equity Shares of Rs 10 each	1,98,000
	Add: Shares Forfeiture	1,600	1,99,600

2	Reserves and Surplus
	Securities Premium	20,000
	Capital Reserve	2,100	22,100

3	Cash and Cash Equivalents
	Cash at Bank		2,21,700

Working Notes:

Share Forfeiture Account credited	Rs 8 per share
Less: Share Forfeiture Account debited	Rs 1 per share
Amount transferred to Capital Reserve Account, after adjustment	Rs 7 per share

Amount transferred to Capital Reserve Account, afteradjustment for 300 shares = 300 Shares @ Rs 7 per share = Rs 2,100

Question - 36 : -
Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the following terms :

Payable on application Rs 5 per share
Payable on allotment Rs 3 per share
Payable on first and final call Rs 2 per share

Applications for 5,00,000 shares were received. It was decided :

(a) to refuse allotment to the applicants for 20,000 shares;
(b) to allot in full to applicants for 80,000 shares;
(c) to allot the balance of the available shares’ pro-rata among the other applicants; and
(d) to utilise excess application money in part as payment of allotment money.
One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited. The shares were reissued @ Rs 9 per share. Show the journal and prepare Cash book to record the above.

Answer - 36 : -

In the books of Alfa Limited Journal
Date	Particulars			L.F.	Debit Amount ₹	Credit Amount ₹
	Share Application A/c		Dr.		24,00,000
		To Share Capital A/c				20,00,000
		To Share Allotment A/c				4,00,000
	(Share Application money adjusted)

	Share Allotment A/c		Dr.		12,00,000
		To Share Capital A/c				12,00,000
	(Share Allotment money due)

	Share First and Final Call A/c		Dr.		8,00,000
		To Share Capital A/c				8,00,000
	(Share First and Final Call due)

WorkingNote:

2. Call in arrears byapplicant on allotment

Money received on Application	(500×5)	=	2,500
Less: Amount adjusted on Application	(400×5)	=	2,000
Amount adjusted on Allotment			500

	Money due on Allotment				(400×3)			1,200
	Less: Money adjusted							500
	Balance due on Allotment							700
Date		Particulars				L.F.	Debit Amount ₹		Credit Amount ₹
		Share Capital A/c		Dr.			4,000
			To Share Allotment A/c						700
			To Share First & Final Call A/c						800
			To Share Forfeiture A/c						2,500
		(400 shares forfeited)

		Share Forfeiture A/c		Dr.			400
			To Share Capital A/c						400
		(Share reissued and loss on issue charged from Share Forfeiture Account)

		Share Forfeiture A/c		Dr.			2,100
			To Capital Reserve A/c						2,100
		(Share Forfeiture Account transferred to Capital Reserve Account)

Cash Book (Bank Column)
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Share Application		25,00,000		Share Application		1,00,000
	Share Allotment		7,99,300		Balance c/d		40,02,100
	Share First and Final Call		7,99,200
	Share Capital		3,600
			41,02,100				41,02,100

Question - 37 : -
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 - 37 : -

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

Question - 38 : - Amit holds 100 shares of ₹ 10 each on which he has paid Re.1 per share as application money. Bimal holds 200 shares of ₹ 10 each on which he has paid Re.1 and ₹ 2 per share as application and allotment money, respectively. Chetan holds 300 shares of ₹ 10 each and has paid Re.1 on application, ₹ 2 on allotment and ₹ 3 for the first call. They all fail to pay their arrears and the second call of ₹ 2 per share and the directors, therefore, forfeited their shares. The shares are reissued subsequently for ₹ 11 per share as fully paid. Journalise the transactions.

Answer - 38 : -

Date	Particulars			L.F.	Debit Amount ₹	Credit Amount ₹
	Share Capital A/c (600×8)		Dr.		4,800
		To Share Allotment (100×2)				200
		To Share First Call A/c (300×3)				900
		To Share Second Call A/c (600×2)				1,200
		To Share Forfeiture A/c				2,500
	(600 shares @ ₹ 10 per share ₹ 8 called-up forfeited after making Second Call)

	Bank A/c		Dr.		6,600
		To Share Capital A/c				6,000
		To Securities Premium A/c				600
	(600 shares @ ₹ 10 each for ₹ 11 per share fully paid-up reissued)

	Share Forfeiture A/c		Dr.		2,500
		To Capital Reserve A/c				2,500
	(Balance of Share Forfeiture Account transferred to Capital Reserve Account after reissue)

WorkingNotes:

Share Forfeiture Account credited
	Amit	(100×1)	=	100
	Bimal	(200×3)	=	600
	Chetan	(300×6)	=	1,800
				2,500

Question - 39 : -
Ajanta Company Limited having a normal capital of ₹ 3,00,000, divided into shares of ₹ 10 each offered for public subscription of 20,000 shares payable at ₹ 2 on application; ₹ 3 on allotment and the balance in two calls of ₹ 2.50 each. Applications were received by the company for 24,000 shares. Applications for 20,000 shares were accepted in full and the shares allotted. Applications for the remaining shares were rejected and the application money was refunded.
All moneys due were received with the exception of the final call on 600 shares which were forfeited after legal formalities were fulfilled. 400 shares of the forfeited shares were reissued at ₹ 9 per share.
Record necessary journal entries and prepare the balance Sheet showing the amount transferred to capital reserve and the balance in Share forfeiture account.

Answer - 39 : -

Books of Ajanta Company Limited
Date	Particulars				L.F.	Debit Amount ₹		Credit Amount ₹
	Bank A/c		Dr.			48,000
		To Share Application A/c						48,000
	(Share Application money received for 24,000 shares @ ₹ 2 per share)

	Share Application A/c		Dr.			48,000
		To Share Capital A/c						40,000
		To Bank A/c						8,000
	(Share Application @ ₹ 2 per share for 20,000 shares transferred to Share Capital and remaining for 4,000 shares rejected)

	Share Allotment A/c		Dr.			60,000
		To Share Capital A/c						60,000
	(Share Allotment money due @ ₹ 3 per share on 20,000 shares )

	Bank A/c		Dr.			60,000
		To Share Allotment A/c						60,000
	(Share Allotment money received for 20,000 shares @ ₹ 3 per share)

	Share First Call A/c		Dr.			50,000
		To Share Capital A/c						50,000
	(Share First Call money due on 20,000 Shares @ ₹ 2.5 per share)

	Bank A/c		Dr.			50,000
		To Share First Call A/c						50,000
	(Share First Call money received for 20,000 shares @ ₹ 2.5 per share)

	Share Final Call A/c		Dr.
		To Share Capital A/c
	(Share Final Call money due on 20,000 Shares @ ₹ 2.5 per share)

	Bank A/c		Dr.			48,500
	Calls in Arrears A/c		Dr.			1,500
		To Share Final Call A/c						50,000
	(Share Final Call money received for 19,400 shares @ ₹ 2.5 per share except 600 shares)

	Share Capital A/c		Dr.			6,000
		To Calls in Arrears A/c						1,500
		To Share Forfeiture A/c						4,500
	(600 Shares forfeited @ ₹ 10 each for the non-payment of Share Final Call @ ₹ 2.5 per share)

	Bank A/c		Dr.			3,600
	Share Forfeiture A/c		Dr.			400
		To Share Capital A/c						4,000
	(400 shares @ ₹ 10 each for ₹ 9 per share reissued)

	Share Forfeiture Account		Dr.			2,600
		To Capital Reserve A/c						2,600
	(After reissue balance of 400 shares in Forfeiture Account transferred to Capital Reserve Account)

Ajanta Company Limited
Balance Sheet
Particulars				Note No.			Amount (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital				1			1,99,500
b. Reserves and Surplus				2			2,600
2. Non-Current Liabilities
3. Current Liabilities
Total							2,02,100

II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents				3			2,02,100
Total							2,02,100

NOTESTO ACCOUNTS

Note No.	Particulars		Amount (₹)
1	Share Capital
	Authorised Share Capital
	30,000 shares of ₹ 10 each		3,00,000
	Issued Share Capital
	20,000 shares of ₹ 10 each		2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	19,800 shares of ₹ 10 each	1,98,000
	Add: Shares Forfeiture	1,500	1,99,500

2	Reserves and Surplus
	Capital Reserve		2,600

3	Cash and Cash Equivalents
	Cash at Bank		2,02,100

WorkingNote:

Share Forfeiture Account credited	₹ 7.5 per share
Less: Share Forfeiture Account debited	₹1 per share
Amount transferred to Capital Reserve Account, after adjustment	₹ 6.5 per share

Amount of 400 sharestransferred to Capital Reserve Account, after reissue = 400 Shares @ ₹ 6.5 pershare = ₹ 2,600

Question - 40 : -
Journalise the following transactions in the books Bhushan Oil Ltd.:

(a) 200 shares of ₹. 100 each issued at a premium of ₹. 10 were forfeited for the non-payment of allotment money of ₹. 60 per share. The first and final call of ₹. 20 per share on these shares were not made. The forfeited shares were reissued at ₹. 70 per share as fully paid-up.
(b) 150 shares of ₹. 10 each issued at a premium of ₹. 4 per share payable with allotment were forfeited for non-payment of allotment money of ₹. 8 per share including premium. The first and final calls of ₹. 4 per share were not made. The forfeited shares were reissued at ₹. 15 per share fully paid-up.
(c) 400 shares of ₹. 50 each issued at par were forfeited for non-payment of final call of ₹. 10 per share. These shares were reissued at ₹. 45 per share fully paid-up.

Answer - 40 : -

Case(a)

Books of Bhushan Oil Ltd.
Date	Particulars			L.F.	Debit Amount (₹)	Credit Amount (₹)
	Share Capital A/c (200 × 80)		Dr.		16,000
	Securities Premium A/c (200 × 10)		Dr.		2,000
		To Share Allotment A/c (200 × 60)				12,000
		To Share Forfeiture A/c (200 × 30)				6,000
	(200 shares forfeited @ ₹100 each issued at a premium of ₹10 for the nonpayment of allotment money ₹60 per share)

	Bank A/c (200 × 70)		Dr.		14,000
	Share Forfeiture A/c (200 × 30)		Dr.		6,000
		To Share Capital A/c (200 × 100)				20,000
	(200 shares reissued @ ₹70 per share fully paid-up)

Case(b)


Date	Particulars			L.F.	Debit Amount (₹)	Credit Amount (₹)
	Share Capital A/c		Dr.		900
	Securities Premium A/c		Dr.		600
		To Share Allotment A/c				1,200
		To Share Forfeiture A/c				300
	(150 shares @ ₹10 each forfeited for nonpayment of allotment money ₹ 8 per share including premium ₹4)

	Bank A/c		Dr.		2,250
		To Share Capital A/c				1,500
		To Securities Premium A/c				750
	(150 shares @ ₹10 each reissued For ₹15 per share fully paid-up)

	Share Forfeiture A/c		Dr.		300
		To Capital Reserve A/c				300
	(Balance of Share Forfeiture Account transferred to Capital Reserve Account)

Case(c)


Date	Particulars			L.F.	Debit Amount (₹)	Credit Amount (₹)
	Share Capital A/c		Dr.		20,000
		To Share Final Call A/c				4,000
		To Share Forfeiture A/c				16,000
	(400 shares @ ₹ 50 per share forfeited for nonpayment of Final Call ₹ 10 per share)

	Bank A/c		Dr.		18,000
	Share forfeiture A/c		Dr.		2,000
		To Share Capital A/c				20,000
	(400 shares @ ₹50 each reissued for ₹45 fully paid-up)

	Share Forfeiture A/c		Dr.		14,000
		To Capital Reserve A/c				14,000
	(Balance in Share Forfeiture Account transferred to Capital Reserve Account)

Free - Previous Years Question Papers

With Application	Rs 3 per share
On allotment (including premium)	Rs 5 per share
On First call	Rs 2 per share
On Second and Final call	Rs 2 per share

Chapter 1 Accounting for Share Capital Solutions

Subscribe Now!