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 1

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 Share Forfeiture Account (18,000 $-$ 10,800) = Rs 7,200

Working Notes:

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 shares transferred to Capital Reserve Account, after reissue

= 400 Shares @ ₹ 12 per share

= Rs 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 shares transferred to Capital Reserve Account, after reissue

= 200 Shares @ Rs 18 per 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

Note: As per the answer amount transferred to capital reserve is ₹6,800 however, it is not correct as the shares reissued at a discount will be provided through Share Forfeiture Account and the valance will be ​₹8,400.