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Question

JCV Ltd., forfeited 200 shares of ₹ 10 each issued at a premium of ₹ 2 per share for the non-payment of allotment money of ₹ 3 per share (including premium). The first and final call of ₹ 4 per share has not been made as yet . 50% of the forfeited shares were reissued at ₹ 8 per share as fully paid-up . Pass necessary Journal entries for the forfeiture and reissue of shares.

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Solution

Application

Rs

5

Allotment

Rs

3

(1+2)

First and Final Call

Rs

4

12

(10+2)

Called-up = Application + Allotment

= Rs 5 + 3 (including premium Rs 2)

Book of JCV Limited

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Share Capital A/c (200×6)

Dr.

1,200

Securities Premium A/c (200×2)

Dr.

400

To Share Forfeiture A/c (200×5)

1,000

To Calls-in-Arrears A/c (200×3)

600

(200 shares of Rs 10 each on which Rs 8 had called (including Rs 2 premium), forfeited for the non-payment of allotment Rs 3 (including Rs 2 premium)

Bank A/c

Dr.

800

Share Forfeiture A/c

Dr.

200

To Share Capital A/c

1,000

(100 shares of Rs 10 each re-issued at Rs 8 per share fully paid-up)

Share Forfeiture A/c

Dr.

300

To Capital Reserve

300

(Amount of share forfeiture of 100 re-issued shares transferred to Capital Reserve)

Working Note

Share Forfeiture of Re-issued Shares

Share Forfeiture (at the time of forfeiture)

Cr.

5

Share Forfeiture (at the time of re-issue)

Dr.

2

Balance in Share Forfeitre (after re-issue)

Cr.

3

per share

Capital Reserve

= Amount of share forfeitureTotal shares forfeited×Shares reissued - Loss on reissue of forfeited shares=1000200×100-100×2 =500-200=300

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