Question

Pass journal entries for the Forfeiture and Re-issue in the following cases:

(a) X Ltd. forfeited 200 shares of Ravi of Rs 10 each Rs 8 called up, on which he had paid application and allotment money of Rs 3 per share. Out of these, 100 shares were re-issued as fully paid up for Rs 8 per share.

(b) Y Ltd. forfeited 300 shares of Rs 10 each, Rs 7 called up, for non-payment of First Call of Rs 2 per share. Out of these, 100 shares were immediately re-issued at Rs 6 per share.

(c) Z Ltd. forfeited 600 shares of Rs 10 each, on which first call of Rs 3 per share was not received; the second and final call of Rs 2 per share has not yet been called. Out of these, 200 shares were re-issued as Rs 8 paid-up for Rs 7 per share.

Answer 1

JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ \text{(a)}& \text{Share Capital A/c}(200\text{Shares}\times \text{Rs 8})& \text{Dr.}& & 1,600& \\ & \text{To Calls in Arrear A/c}(200\times \text{Rs 5})& & & & 1,000\\ & \text{To Share Forfeiture A/c}(200\times \text{Rs 3})& & & & 600\\ & \text{(Forfeiture of 200 shares of Ravi)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 800& \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & 200& \\ & \text{To Share Capital A/c}& & & & 1,000\\ & \text{(Re-issue of 100 shares @ Rs 8 per share fully paid)}& & & & \\ & {\text{Share Forfeiture A/c}}^{\left(1\right)}& \text{Dr.}& & 100& \\ & \text{To Capital Reserve A/c}& & & & 100\\ & \text{(Profit on 100 re-issued shares transferred to Capital Reserve)}& & & & \\ \text{(b)}& \text{Share Capital A/c}(300\text{Shares}\times \text{Rs 7})& \text{Dr.}& & 2,100& \\ & \text{To Share First Call}(300\times \text{Rs 2})& & & & 600\\ & \text{To Share Forfeiture A/c}& & & & 1,500\\ & \text{(Forfeiture of 300 shares)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 600& \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & 100& \\ & \text{To Share Capital A/c}& & & & 700\\ & \text{(Re-issue of 100 shares @ Rs 6 per share )}& & & & \\ & {\text{Share Forfeiture A/c}}^{\left(2\right)}& \text{Dr.}& & 400& \\ & \text{To Capital Reserve A/c}& & & & 400\\ & \text{(Profit on 100 re-issued shares transferred to Capital Reserve A/c)}& & & & \\ \text{(c)}& \text{Share Capital A/c}(600\text{Shares}\times \text{Rs 8})& \text{Dr.}& & 4,800& \\ & \text{To Share First Call}(600\times \text{Rs 3})& & & & 1,800\\ & \text{To Share Forfeiture A/c}(600\times \text{Rs 5})& & & & 3,000\\ & \text{(Forfeiture of 600 shares)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 1,400& \\ & \text{Share Forfeiture A/c}& \text{Dr.}& & 200& \\ & \text{To Share Capital A/c}& & & & 1,600\\ & \text{(Re-issue of 200 shares @ Rs 7 per share )}& & & & \\ & {\text{Share Forfeiture A/c}}^{\left(3\right)}& \text{Dr.}& & 800& \\ & \text{To Capital Reserve A/c}& & & & 800\\ & \text{(Profit on 200 re-issued shares transferred to Capital Reserve A/c)}& & & & \end{array}$

Notes:

$\begin{array}{ccc}\text{(1) Profit on 200 shares = Rs 600}& & \text{Rs.}\\ \text{Hence, Profit on 100 shares =}\frac{600}{100}\times 100& =& 300\\ \text{Less: Loss on Re-issue : 100 shares}\times \text{Rs 2}& =& 200\\ \text{Transferred to Capital Reserve}& =& \overline{\underset{–}{\underset{–}{100}}}\\ \text{(2) Profit on 300 shares = Rs 1,500}& & \\ \text{Hence, Profit on 100 shares =}\frac{1,500}{300}\times 100& =& 500\\ \text{Less: Loss on Re-issue : 100 shares}\times \text{Rs 1}& =& 100\\ \text{Transferred to Capital Reserve}& =& \overline{\underset{–}{\underset{–}{400}}}\\ \text{(3) Profit on 600 shares = Rs 3,000}& & \\ \text{Hence, Profit on 100 shares =}\frac{3,000}{600}\times 200& =& 1,000\\ \text{Less: Loss on Re-issue : 200 shares}\times \text{Rs 1}& =& 200\\ \text{Transferred to Capital Reserve}& =& \overline{\underset{–}{\underset{–}{800}}}\end{array}$