Question

Journalise the following transaction in the books Bhushan Oil Ltd
(a) 200 shares of Rs. 100 each issued at a premium of Rs. 10 were forfeited for the non-payment of allotment money of Rs. 60 per share. The first and final call of Rs. 20 per share on these shares were not made. The forfeited shares were reissued at Rs. 70 per share as fully paid-up.
(b) 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment were forfeited for non-payment of allotment money of Rs. 8 per share including premium. The first and final call of Rs. 4 per share were not made. The forfeited share were reissued at Rs. 15 per share fully paid-up.
(c) 400 share of Rs. 50 each issued at par were forfeited for non-payment of final call of Rs. 10 per share. These share were reissued at Rs. 45 per share fully paid-up.

Answer 1

Case (a)
$\begin{array}{ccccccc}& & & & & & \\ & & & & \text{Journal Entries}& & \end{array}\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Share Capital A/c}& \text{Dr}& & 16,000& \\ & \text{Securities Premium A/c}& \text{Dr}& & 2,000& \\ & \text{To Share Allotment A/c}(200\times 60)& & & & 12,000\\ & \text{To Share Forfeiture A/c}(200\times 30)& & & & 6,000\\ & \text{(200 shares forfeited @ Rs.100 each issued at}& & & & \\ & \text{a premium of Rs.10 for the non payment of allotment}& & & & \\ & \text{money Rs.60 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Bank A/c}(200\times 70)& \text{Dr}& & 14,000& \\ & \text{Share Forfeiture A/c}& \text{Dr}& & 6,000& \\ & \text{To Share Capital A/c}(200\times 50)& & & & 20,000\\ & \text{(200 shares reissued @ Rs.70 per share fully}& & & & \\ & \text{paid-up)}& & & & \end{array}$

Note There will be no capital reserve in case(a) as full amount transferred to forfeiture account is adjusted on reissue.

Money received on application will be Rs 20 per share after deducting Rs 20 for final call. Rs 10 for discount and Rs 50 for allotment from face value Rs 100.

Case (b)
$\begin{array}{ccccccc}& & & & & & \\ & & & & \text{Journal Entries}& & \end{array}\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Share Capital A/c}(150\times 6)& \text{Dr}& & 900& \\ & \text{Securities Premium A/c}(150\times 4)& \text{Dr}& & 600& \\ & \text{To Share Allotment A/c}(150\times 8)& & & & 1,200\\ & \text{To Share Forfeiture A/c}(150\times 2)& & & & 300\\ & \text{(Being 150 shares @ Rs.10 each forfeited for}& & & & \\ & \text{non-payment of allotment money Rs.8 per share}& & & & \\ & \text{including premium Rs.4)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Bank A/c}(150\times 15)& \text{Dr}& & 2,250& \\ & \text{To Share Capital A/c}(150\times 10)& & & & 1,500\\ & \text{To Secutities Premium A/c}(150\times 5)& & & & 750\\ & \text{(150 shares @ Rs.10 each reissued for Rs.15}& & & & \\ & \text{per share fully paid-up)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iii)}& \text{Share Forfeiture A/c}& \text{Dr}& & 300& \\ & \text{To Capital Reserve A/c}& & & & 300\\ & \text{(Balance of share forfeiture account}& & & & \\ & \text{transferred to capital reserve account)}& & & & \end{array}$

Working Note:

Calculation of Capital Reserve: As the shares are reissued at price higher than face value. Hence, full amount of share forfeiture will be transferred to capital reserve.

Case (c)
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Share Capital A/c}(400\times 50)& \text{Dr}& & 20,000& \\ & \text{To Share Final Call A/c}(400\times 10)& & & & 4,000\\ & \text{To Share Forfeiture Call A/c}(400\times 40)& & & & 16,000\\ & \text{( 400 shares @ Rs.50 per share forfeited for}& & & & \\ & \text{non-payment of final call Rs.10 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Bank A/c}(400\times 45)& \text{Dr}& & 18,000& \\ & \text{Share Forfeiture A/c}(400\times 5)& \text{Dr}& & 2,000& \\ & \text{To Share Capital A/c}& & & & 20,000\\ & \text{(400 shares @ Rs.50 each reisuued for Rs. 45}& & & & \\ & \text{fully paid-up)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iii)}& \text{Share Forfeiture A/c}& \text{Dr}& & 14,000& \\ & \text{To Capital Reserve A/c}& & & & 14,000\\ & \text{(Balance in share forfeiture account}& & & & \\ & \text{transferred to capital reserve account)}& & & & \end{array}$

Working Note:

Calculation of Capital Reserve

$\begin{array}{cc}& \\ \text{Amount transferred to share forfeiture}& 16,000\\ \text{(-) Amount adjusted on reissue}& (2,000)\\ \text{Amount transferred to capital reserve}& \overline{\underset{–}{14,000}}\end{array}$