Ashoka Limited Company which had issued equity shares of Rs.20 each at a discount of Rs.4 per share. Forfeited 1,000 shares for non-payment of final call of Rs.4 per share. 400 of the forfeited shares are 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.

Ashoka Limited Company which had issued equity shares of ₹.20 each at a premium of ₹. 4 per share, forfeited 1,000 shares for non-payment of final call of ₹.2 per share. 400 of the forfeited shares were reissued at ₹.14 per share out of the remaining shares of 200 shares reissued at ₹.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.

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Solution

Balance in Share Forfeiture Account $(18, 000 - 10, 8000) = ₹ 7, 200$

Working Notes:
For 400 Shares
Amount of 400 shares transferred to Capital Reserve Account, after reissue
= 400 Shares @ ₹ 12 per share
= ₹ 4,800
For 200 Shares
Amount of 200 shares transferred to Capital Reserve Account, after reissue
= 200 Shares @ ₹ 18 per share
= ₹3,600

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