Forfeiture of Shares which were Issued at Premium
Question 57:
Ratan Ltd. forfeited 3,000 shares of ₹10 each (issued at ₹2 premium) for non-payment of first call of ₹2 per share. Final call of ₹3 per share was not yet made. Out of these, 2,000 shares we₹10 per share as fully paid. Pass entries for forfeiture and reissue of shares. (CBSE Sample Paper 2023)
Answer:
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Books of Ratan Ltd. Journal |
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Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
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Share capital A/c (3,000×7) |
Dr. |
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21,000 |
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To Share forfeited A/c (3,000×5) |
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15,000 |
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To Share first call A/c (3,000×2) |
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6,000 |
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(Being share forfeited for non-payment) |
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Bank A/c (2,000×10) |
Dr. |
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20,000 |
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To Share capital A/c |
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20,000 |
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(Being 2,000 shares reissued) |
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Share forfeited A/c |
Dr. |
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10,000 |
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To Capital Reserve A/c |
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10,000 |
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(Being balance in Share forfeited account of reissued share transferred) |
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Working notes:
Amount paid-up 18,000
Amount to be transferred to capital reserve = 18,000÷5000×3,000
Question 58:
Macil Ltd. forfeited 3,000 shares of ₹100 each issued at 20% premium for the non-payment of allotment money of ₹30 per share and first call of ₹40 per share (including premium ₹10). The second and final call of 30 per share (including premium ₹10) was not yet called. Out of these, 2,000 shares were reissued at ₹80 per share paid-up for ₹90 per share. Pass entries for forfeiture and reissue of shares.
(CBSE 2025)
Answer:
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In the Books of Macil Ltd. Journal |
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Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
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Equity Share Capital A/c |
Dr. |
2,40,000 |
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Securities Premium Reserve A/c |
Dr. |
30,000 |
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To Forfeited Shares A/c |
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90,000 |
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To Share allotment A/c |
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1,20,000 |
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To Share First Call A/c |
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60,000 |
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(Being 3,000 shares forfeited for non-payment of allotment and first call money) |
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Bank A/c |
Dr. |
1,80,000 |
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To Equity Shares Capital A/c |
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1,60,000 |
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To S. P. R. A/c |
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20,000 |
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(Being 2,000 forfeited shares reissued at ₹90 per share as ₹80 paid-up) |
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Forfeited Shares A/c |
Dr. |
40,000 |
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To Capital Reserve A/c |
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40,000 |
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(Being gain on reissue of 2,000 forfeited shares transferred to capital reserve) |
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Working Notes:
Transfer of Gain to Capital Reserve:
· No loss on issue of discount therefore total amount of forfeited on reissue will be transferred to capital reserve account.
Question 59:
Ajanta Ltd. issued a prospectus inviting applications for issuing 5,00,000 equity shares of ₹10 each issued at a premium of 10%. The amount was payable as follows:
On Application -₹3 per share
On Allotment (including premium) - ₹5 per share
On First and Final Call - ₹3 per share
Applications were received for 6,00,000 shares and pro rata allotment was made to all applicants. Excess money received on application was adjusted towards sums due on allotment. All amounts were duly received except from Sumit, who was the holder of 1,000 shares, and failed to pay the allotment and first and final call. His shares were forfeited.
Pass Journal entries for the above transactions in the books of Ajanta Ltd. Open Calls-in-Arrears Account wherever necessary. (CBSE 2023)
Answer:
Issued
and Subscribed Capital 5,00,000
shares
of ₹10 each at ₹1 Premium
Payable as:
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₹ |
3 |
On application |
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₹ |
5 |
On allotment (including 5 Premium) |
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₹ |
3 |
On first call |
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11 |
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Books of Ajanta Ltd. Journal |
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Date |
Particulars |
L.F. |
Debit (₹) |
Credit (₹) |
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Bank A/c (6,00,000×3) |
Dr. |
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18,00,000 |
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To Share Application A/c |
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18,00,000 |
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(Share application money received for 6,00,000 shares at₹3 per share) |
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Share Application A/c (6,00,000×6) |
Dr. |
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18,00,000 |
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To Share Capital A/c (5,00,000×3) |
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15,00,000 |
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To Share Allotment A/c |
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3,00,000 |
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(Share application Money transferred to Share Capital and excess application money transferred To Share Allotment Account) |
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Share Allotment A/c (5,00,000×5) |
Dr. |
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25,00,000 |
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To Share Capital A/c (5,00,000×4) |
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20,00,000 |
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To Securities Premium Reserves A/c (5,00,000×1) |
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5,00,000 |
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(Share allotment due on 5,00,000 shares at₹4 with premium of ₹1 per share) |
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Bank A/c |
Dr. |
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21,95,000 |
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Calls-in-Arrears A/c (1,000×5) Dr. |
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5,000 |
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To Share Allotment A/c |
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22,00,000 |
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(Share allotment money received except 1,000 shares) |
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Share First Call A/c (5,00,000×3) |
Dr. |
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15,00,000 |
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To Share Capital A/c |
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15,00,000 |
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(Share first call due on 5,00,000 shares at₹3 per share) |
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Bank A/c |
Dr. |
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14,97,000 |
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Calls-in-Arrears A/c (1,000×3) Dr. |
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3,000 |
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To Share First and Final call A/c |
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15,00,000 |
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(Share first call received on 10,000 shares at₹3per share except 1,000 shares) |
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Share Capital A/c (1,000×10) |
Dr. |
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10,000 |
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Securities Premium Reserves A/c (1,000×1) |
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1,000 |
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To Share Forfeited A/c (1,000×3) |
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3,600 |
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To Calls-in-Arrears A/c (1,000×8) |
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7,400 |
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(Being shares forfeited due non-payment of allotment and first call) |
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\Working note:
Sumit applied for 1,000×6,00,000÷5,00,000=1,200 shares
Payment received from Sumit on application = 1,200×3=3,600
Question 60:
Ankit Ltd. issued 20,000 equity shares of 10 each at a premium of ₹2 per share, payable as:
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On Application |
: |
₹3 |
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On Allotment |
: |
₹5 (including premium) |
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On First Call |
: |
₹2 |
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On Second and Final Call |
: |
₹2 |
Vijay was allotted 500 shares. Pass the necessary Journal entries relating to the forfeiture of shares in following cases.
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Case I |
Vijay did not pay allotment money and his shares were immediately forfeited. |
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Case II |
Vijay did not pay allotment and first call, his shares were forfeited after first call. |
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Case III |
Vijay failed to pay first call and his shares were forfeited immediately. |
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Case IV |
Vijay failed to pay both the calls and his shares were forfeited. |
Answer:
Case I:
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In the books of Ankit Ltd. Journal |
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Date |
Particulars |
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L.F. |
Debit (₹) |
Credit (₹) |
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Share Capital A/c (500 × 6) |
Dr. |
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3,000 |
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Securities Premium Reserve A/c (500 × 2) |
Dr. |
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1,000 |
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To Share Forfeiture A/c (500 × 3) |
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1,500 |
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To Share Allotment A/c (500 × 5) |
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2,500 |
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(Being 500 shares forfeited for non-payment of allotment money) |
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Case II:
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In the books of Ankit Ltd. Journal |
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Date |
Particulars |
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L.F. |
Debit (₹) |
Credit (₹) |
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Share Capital A/c (500 × 8) |
Dr. |
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4,000 |
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Securities Premium Reserve A/c (500 × 2) |
Dr. |
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1,000 |
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To Share Forfeiture A/c (500 × 3) |
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1,500 |
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To Share Allotment A/c (500 × 5) |
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2,500 |
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To Share First Call A/c (500 × 2) |
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1,000 |
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(Being 500 shares forfeited for non-payment of allotment and first call) |
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Case III:
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In the books of Ankit Ltd. Journal |
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Date |
Particulars |
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L.F. |
Debit |
Credit |
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Share Capital A/c (500 × 8) |
Dr. |
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4,000 |
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To Share Forfeiture A/c (500 × 6) |
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3,000 |
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To Share First Call A/c (500 × 2) |
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1,000 |
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(Being 500 shares forfeited for non-payment of first call) |
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Case IV:
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In the books of Ankit Ltd. Journal |
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Date |
Particulars |
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L.F. |
Debit |
Credit |
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Share Capital A/c (500 × 10) |
Dr. |
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5,000 |
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To Share Forfeiture A/c (500 × 6) |
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3,000 |
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To Share First Call A/c (500 × 2) |
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1,000 |
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To Share Second and Final Call (500 × 2) |
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1,000 |
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(Being 500 shares forfeited for non-payment of first and second call) |
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Ts Grewal Solution 2026-2027
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Class 12 / Volume – 2
Chapter 1- Company Accounts- Accounting for Share Capital
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