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Question

Radhika Limited issued 50,000 shares of Rs 10 each. The due amount was received except on 1,000 shares on which Rs 6 per share was received. These 1,000 shares were forfeited and 700 shares were reissued for Rs 8 each fully paid-up.

Show the Forfeited Shares Account and the Balance Sheet as at closing date.


Solution

                                        Radhika Limited

Dr.                          FORFEITED SHARES ACCOUNT                           Cr.              ParticularsRs.          ParticularsRs. Share Capital A/c (700×2)1,400Share Capital A/cCapital Reserve A/c (Note 2)2,800(1,000×Rs 6)6,000Balance c/d1,800¯¯¯¯¯¯¯¯¯¯¯¯¯6,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯6,000––––––––

BALANCE SHEET
as at..........................................................

        ParticularsNote No.I. EQUITY AND LIABILITIESRs.  (a) Share Capital14,98,800  (B) Reserve and Surplus2    2,800                        TOTAL¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯5,01,600––––––––––––––––II. ASSETS:   Current Assets:  Cash and Cash Equivalents35,01,600                        TOTAL¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯5,01,600––––––––––––––––

Notes to Accounts:

Rs.1. Share Capital:     Authorised Capital :     ..... Equity Shares of Rs 10 each ..........––––––––––––––––––     Issued Capital:     50,000 Shares of Rs 10 each5,00,000––––––––––––––––     Subscribed Capital     Subscribed and Fully Paid Capital:     49,700 Shares of Rs 10 each fully paid4,97,000     Add: Forfeited Shares A/c      1,800––––––––4,98,800––––––––––––––––2.  Reserves and Surplus   Capital Reserve    2,800––––––––3.   Cash and Cash Equivalents   Cash at Bank5,01,600––––––––––––––––

Working Notes:
  (1) Journal entries on forfeiture and reissue:

    Date          ParticularsL.FDr (Rs)Cr. (Rs)Share Capital A/c(1,000 ×Rs 10)   Dr.10,000   To Calls-in-Arrears A/c(1,000 ×Rs 4)  4,000   To Forfeited Shares A/c(1,000 ×Rs 4)  6,000Bank A/c(700 ×Rs 8)   Dr. 5,600Forfeited Shares A/c(700 ×Rs 2)   Dr. 1,400    To Share Capital A/c7,000

   (2)
Gain on reissue to be transferred to Capital Reserve:Rs.Amount forfeited on 700 reissued shares(700×Rs. 6)4,200Less: Discount on resissue (700×Rs. 2)1,400Gain on reissue transferred to Capital Reserve¯¯¯¯¯¯¯¯¯¯¯¯¯2,800––––––––

  (3) The balance of Rs 1,800 remaining in Forfeited Shares Amount is in respect of 300 shares not yet reissued.

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