Question

# (a) Ravi Ltd. forfeited 800 shares of Rs 10 each, Rs 7.50 paid, for non-payment of Final Call of Rs 2.50 per share. Out of these, 600 shares were re-issued as fully paid up in such a way that Rs 2,100 were transferred to capital reserve. Pass necessary journal entries. (b) X Ltd. forfeited 800 shares of Rs 10 each, Rs 7.50 called-up, for non-payment of Final Call of Rs 2.50 per share. Out of these, 600 shares were re-issued for Rs 6 per share as Rs 7.50 paid up. Pass necessary journal entries. (c) 400 shares of Rs 10, on which Rs 8 has been called and Rs 6 has been paid, are forfeited. Out of these, 300 are re-issued for Rs 7 as fully paid. Pass necessary journal entries.

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Solution

## (a) JOURNAL Date ParticularsL.FDr (Rs)Cr. (Rs)Share Capital A/c (800 ×Rs 10)Dr. 8,000 To Share First Call (800 ×Rs 2.50) 2,000 To Share Forfeiture A/c (800 ×Rs 7.50) 6,000(Forfeiture of 800 shares)Bank A/c(1)Dr. 3,600Share Forfeiture A/cDr. 2,400 To Share Capital A/c 6,000(Re-issue of 600 shares @ Rs 6 per share as fully paid up)Share Forfeiture A/cDr. 2,100 To Capital Reserve A/c 2,100(Profit on 600 re-issued shares transferred to Capital Reserve ) Note (1) Profit on 800 shares = Rs 6,000 Rs.∴ Profit on 600 shares = 6,000800×600= 4,500 Less: Transferred to Capital Reserve= 2,100 Loss on Re-issue = ¯¯¯¯¯¯¯¯¯¯¯¯¯2,400–––––––––––– Per share loss on re-issue =2,400600=Rs 4 per share. Hence, Shares are re-issued at Rs 10 - Rs 4 = Rs 6 per share. (b) JOURNAL Date ParticularsL.FDr (Rs)Cr. (Rs)Share Capital A/c (800 ×Rs 7.50)Dr. 6,000 To Share First Call (800 ×Rs 2.50) 2,000 To Share Forfeiture A/c (800 ×Rs 5) 4,000(Forfeiture of 800 shares)Bank A/cDr. 3,600Share Forfeiture A/cDr. 900 To Share Capital A/c 4,500(Re-issue of 600 shares @ Rs 6 per share as rS 7.50 paid up)Share Forfeiture A/c(2)Dr. 2,100 To Capital Reserve A/c 2,100(Profit on 600 re-issued shares transferred to Capital Reserve ) Note (2) Profit on 800 shares = Rs 4,000 Rs.∴ Profit on 600 shares =Rs 4,000× 600800= 3,000 Loss on Re-issue of 600 shares @ Rs 1.50 each= 900 ¯¯¯¯¯¯¯¯¯¯¯¯¯2,100–––––– (c) JOURNAL Date ParticularsL.FDr (Rs)Cr. (Rs)Share Capital A/cDr. 3,200 To Calls in Arrears A/c 800 To Share Forfeiture A/c 2,400(Forfeiture of 400 shares)Bank A/cDr. 2,100Share Forfeiture A/cDr. 900 To Share Capital A/c 3,000(Re-issue of 300 shares @ Rs 6 per share as Rs 7.50 paid up)Share Forfeiture A/c(3)Dr. 900 To Capital Reserve A/c 900(Profit on 300 re-issued shares transferred to Capital Reserve ) Note (3) Profit on 400 shares = Rs 2,400 Rs.∴ Profit on 300 shares =Rs 2,400× 300400= 1,800 Loss on Re-issue of 300 shares @ Rs 3 each= 900 ¯¯¯¯¯¯¯¯900––––

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