A holds 100 shares of ₹ 10 each on which he has paid ₹ 1 per share on application.
B holds 200 shares of ₹ 10 each on which he has paid ₹ 1 and ₹ 2 per share on application and allotment respectively.
C holds 300 shares of ₹ 10 each and has paid ₹ 1 on application, ₹ 2 on allotment and ₹ 3 on first call. They all fail to pay their arrears and the second call of ₹ 2 per share . Shares are forfeited and subsequently reissued @ ₹ 11 per share as fully paid-up.
journalise the above.

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Solution

Application

Rs

1

Allotment

Rs

2

First Call

Rs

3

Second Call

Rs

2

Rs

8

Called-up

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Forfeiture of Shares

Shares of A

Share Capital A/c

Dr.

800

To Share Forfeiture A/c

100

To Calls-In-Arrears A/c

700

(100 shares of Rs 10 each, Rs 8 called-up, held by A forfeited for the non-payment of Rs 7 per share)

Shares of B

Share Capital A/c

Dr.

1,600

To Share Forfeiture A/c

600

To Calls-in-Arrears A/c

1,000

(200 shares of Rs 10 each, Rs 8 called-up, held by B forfeited for non-payment of Rs 5 per share)

Shares of C

Share Capital A/c

Dr.

2,400

To Share Forfeiture A/c

1,800

To Calls-in-Arrears A/c

600

(300 shares of Rs 10 each, Rs 8 called-up held by C forfeited for the non-payment of Rs 2 per share)

Re-issue of shares

Bank A/c

Dr.

6,600

To Share Capital A/c

6,000

To Securities Premium A/c

600

(600 shares of Rs 10 each re-issued at Rs 11 per share fully paid-up)

Share Forfeiture A/c

Dr.

2,500

To Capital Reserve A/c

2,500

(Share Forfeiture transferred to Capital Reserve)

Working Note:

Share Forfeiture of 100 shares held by A

Rs

100

Cr.

Share Forfeiture of 200 shares held by B

Rs

600

Cr.

Share Forfeiture of 300 shares held by C

Rs

1,800

Cr.

Total Share Forfeiture credit (at the time of cancellation of shares)

Rs

2,500

Calculation of Capital Reserve

Total Share Forfeiture (at the time of cancellation of shares) = Rs 2,500 Cr.

Less: Total Share Forfeiture (at the time of re-issue of shares) = (NIL) Dr.

Capital Reserve =Rs 2,500

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Q. A holds

100

Shares of

R s . 10

each on which he has paid

R e . 1

per share as application money. B holds

200

Shares of Rs. each on which he has paid

R e . 1

and

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Application	Rs	1
Allotment	Rs	2
First Call	Rs	3
Second Call	Rs	2
	Rs	8	Called-up

Journal Entries
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Forfeiture of Shares
	Shares of A
	Share Capital A/c	Dr.		800
	To Share Forfeiture A/c				100
	To Calls-In-Arrears A/c				700
	(100 shares of Rs 10 each, Rs 8 called-up, held by A forfeited for the non-payment of Rs 7 per share)

	Shares of B
	Share Capital A/c	Dr.		1,600
	To Share Forfeiture A/c				600
	To Calls-in-Arrears A/c				1,000
	(200 shares of Rs 10 each, Rs 8 called-up, held by B forfeited for non-payment of Rs 5 per share)

	Shares of C
	Share Capital A/c	Dr.		2,400
	To Share Forfeiture A/c				1,800
	To Calls-in-Arrears A/c				600
	(300 shares of Rs 10 each, Rs 8 called-up held by C forfeited for the non-payment of Rs 2 per share)
	Re-issue of shares

	Bank A/c	Dr.		6,600
	To Share Capital A/c				6,000
	To Securities Premium A/c				600
	(600 shares of Rs 10 each re-issued at Rs 11 per share fully paid-up)

	Share Forfeiture A/c	Dr.		2,500
	To Capital Reserve A/c				2,500
	(Share Forfeiture transferred to Capital Reserve)

Share Forfeiture of 100 shares held by A	Rs	100	Cr.
Share Forfeiture of 200 shares held by B	Rs	600	Cr.
Share Forfeiture of 300 shares held by C	Rs	1,800	Cr.
Total Share Forfeiture credit (at the time of cancellation of shares)	Rs	2,500