Question

Krishna Ltd issued 15,000 shares of Rs.100 each at a premium of Rs.10 per share, payable as follows
$\begin{array}{ccc}& & \\ & & \text{(Rs.)}\\ \text{On Application}& =& 30\\ \text{On Allotment}& =& 50\text{(including premium)}\\ \text{On First and Final Call}& =& 30\end{array}$

All the shares subscribed and the company received all the money due. With the exception of the allotment and call money on 150 shares. These shares were forfeited and reissued to Neha as fully paid share of Rs.120 each.

Give journal entries in the books of the company.

Answer 1

$\text{Journal Entries}$
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Bank A/c}& \text{Dr}& & 4,50,000& \\ & \text{To Share Application A/c}& & & & 4,50,000\\ & \text{(Shares application money received for}& & & & \\ & \text{15,000 shares @ Rs.30 per share)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Share Application A/c}& \text{Dr}& & 4,50,000& \\ & \text{To Share Capital A/c}(15,000\times 30)& & & & 4,50,00\\ & \text{(Shares application money of 15,000 shares}& & & & \\ & \text{transferred to share capital account)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iii)}& \text{Bank A/c}(14,850\times 50)& \text{Dr}& & 7,42,500& \\ & \text{Calls-in-Arrears A/c}(150\times 50)& \text{Dr}& & 7,500& \\ & \text{To Share Allotment A/c}& & & & 7,50,000\\ & \text{(Shares allotment received on 14,850 shares}& & & & \\ & \text{and 150 shares failed to pay the money due)}& & & & \\ & \underset{–}{}& & & & \\ \text{(iv)}& \text{Share Allotment A/c}& \text{Dr}& & 7,50,000& \\ & \text{To Share Capital A/c}(15,000\times 40)& & & & 6,00,000\\ & \text{To Securities Premium A/c}(15,000\times 10)& & & & 1,50,000\\ & \text{(Shares allotment money on 15,000 shares @}& & & & \\ & \text{Rs.50 per share including Rs.10 securities premium due)}& & & & \\ & \underset{–}{}& & & & \\ \text{(v)}& \text{Bank A/c}(14,850\times 30)& \text{Dr}& & 4,45,500& \\ & \text{Calls-in-Arrears A/c}(150\times 30)& \text{Dr}& & 4,500& \\ & \text{To Share First and Final Call A/c}& & & & 4,50,000\\ & \text{(Share first and final call received for 14,850}& & & & \\ & \text{shares @ Rs.30 per share and 150 shares failed to}& & & & \\ & \text{pay amount due)}& & & & \\ & \underset{–}{}& & & & \\ \text{(vi)}& \text{Share First and Final Call A/c}& \text{Dr}& & 4,50,000& \\ & \text{To Share Capital A/c}& & & & 4,50,000\\ & \text{(Share first and final call for 15,000 shares}& & & & \\ & \text{@ Rs.30 per share due)}& & & & \\ & \underset{–}{}& & & & \\ \text{(vii)}& \text{Share Capital A/c}(150\times 100)& \text{Dr}& & 15,000& \\ & \text{Share Premium A/c}(150\times 10)& \text{Dr}& & 1,500& \\ & \text{To Calls-in-Arrears A/c}(150\times 80)& & & & 12,000\\ & \text{To Share Forfeiture A/c}(150\times 30)& & & & 4,500\\ & \text{(150 shares forfeited for non-payment of amount on}& & & & \\ & \text{allotment and first and final call)}& & & & \\ & \underset{–}{}& & & & \\ \text{(viii)}& \text{Bank A/c}(150\times 100)& \text{Dr}& & 18,000& \\ & \text{To Share Capital A/c}(150\times 100)& & & & 15,000\\ & \text{To Securities Premium A/c}(150\times 20)& & & & 3,000\\ & \text{(150 shares of Rs.100 each reissued @}& & & & \\ & \text{Rs.120 to Neha)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ix)}& \text{Share Forfeture A/c}(150\times 100)& \text{Dr}& & 4,500& \\ & \text{To Capital Reserve A/c}(150\times 100)& & & & 4,500\\ & \text{(Balance of share forfeiture account}& & & & \\ & \text{transferred to capital reserve account)}& & & & \end{array}$

Note :

(i) The reissue of forfeited share should be read as done @ Rs. 120 per share instead of Rs.12.

(ii) As shares are reissued at premium and nothing is adjusted from share forfeiture on reissue hence full amount of share forfeiture will be transferred to capital reserve account.

(iii) At the time of forfeiture if shareholder did not pay securities premium. It should be debited generally securities premium is credited.