12th | Issue of share capital | Question No. 85 To 88 | Ts Grewal Solution 2024-2025

JCV Ltd., forfeited 200 shares of  ` 10 each issued at a premium of  ` 2 per share for the non-payment of  allotment money of  ` 3 per share (including premium). The first and final call of   ` 4 per share has not been made as yet. 50% of  the forfeited shares were reissued at ` 8 per share  as fully paid-up . Pass necessary Journal entries for the forfeiture and reissue of  shares. (CBSE 2011 C)

Answer:

Application	`	5
Allotment	`	3	(1+2)
First and Final Call	`	4
		12	(10+2)

 

Called-up = Application + Allotment

= ` 5 + 3 (including premium ` 2)

 

Book of  JCV Limited Journal
Date	Particulars		L.F.	Debit `	Credit `
	Share Capital A/c (200×6)	Dr.		1,200
	Securities Premium A/c (200×2)	Dr.		400
	To Share Forfeiture A/c (200×5)				1,000
	To Calls-in-Arrears A/c (200×3)				600
	(200 shares of  ` 10 each on which ` 8  had called (including ` 2 premium), forfeited for the non-payment of  allotment ` 3 (including ` 2 premium)
	Bank A/c	Dr.		800
	Share Forfeiture A/c	Dr.		200
	To Share Capital A/c				1,000
	(100 shares of  ` 10 each re-issued at ` 8 per share fully paid-up)
	Share Forfeiture A/c	Dr.		300
	To Capital Reserve				300
	(Amount of  share forfeiture of  100 re-issued shares transferred to Capital Reserve)

 

Working Note

 

Share Forfeiture of  Re-issued Shares

Share Forfeiture (at the time of  forfeiture)	Cr.	5
Share Forfeiture (at the time of  re-issue)	Dr.	2
Balance in Share Forfeiter (after re-issue)	Cr.	3	per share

Capital Reserve

= Amount of  share forfeitureTotal shares forfeited×Shares reissued - Loss on reissue of  forfeited shares=1000200×100-100×2 =500-200=300

 

Pass necessary journal entries in the books of  the company for the following transactions:
Vishesh Ltd. forfeited 1,000 Equity Shares of  ` 10 each issued at a premium of  ` 2 per share for non-payment of  allotment money of  ` 5 per share including premium. The final call of  ` 2 per share was not yet called on these shares. Of  the forfeited shares 800 shares were reissued at ` 12 per share as fully paid-up.
The remaining shares were reissued at ` 11 per share fully paid-up. (CBSE 2013 C)

Answer:

 

Journal In the books of  Vishesh Ltd.
Date	Particulars		L.F.	Debit `	Credit `
	Equity Share Capital A/c (8×1,000)	Dr.		8,000
	Securities Premium A/c (2×1,000)	Dr.		2,000
	To Share Forfeiture A/c				5,000
	To Calls-in-Arrears				5,000
	(1,000 shares of  ` 10 each issued at premium of  ` 2 forfeited for non-payment of  allotment money of  ` 5 including premium, final call of  ` 2 not yet made)
	Bank A/c (12×800)	Dr.		9,600
	To Share Capital A/c				8,000
	To Securities Premium A/c				1,600
	(800 shares reissued at ` 12 fully paid up)
	Bank A/c (11×200)	Dr.		2,200
	To Share Capital A/c				2,000
	To Securities Premium A/c				200
	(200 shares reissued at ` 11 fully paid up)
	Share Forfeiture A/c	Dr.		5,000
	To Capital Reserve A/c				5,000
	(Prof it on reissue transferred to capital reserve)

 

Gaurav applied for 5,000 shares of  ` 10 each at a premium of  2.50 per share. But he was allotted only 2,500 shares on pro rata basis . After having paid ` 3 per share on application, he did not pay allotment money of  ` 4.50 per share (including premium) and on his subsequent failure to pay the first call of  ` 2 per share, his shares were forfeited. These shares were reissued at the rate of  ` 8 per share credited as fully paid .
Pass journal entries to record the forfeiture and reissue of  shares.

Answer:

Journal
Date	Particulars		L.F.	Debit (`)	Credit (`)
	Equity Share Capital A/c (2,500×7)	Dr.		17,500
	Security Premium Reserve A/c	Dr.		3,750
	To Equity Share Allotment A/c				3,750
	To  Equity Share First Call A/c (2,500×2)				5,000
	To Share Forfeited A/c				12,500
	(2,500 shares forfeited)
	Bank A/c (2,500×8)	Dr.		20,000
	Share Forfeited A/c (2,500×2)	Dr.		5,000
	To Equity Share Capital A/c (2,500×10)				25,000
	(Share reissued @` 8 per share fully paid-up)
	Share Forfeited A/c (12,500 – 5,000)	Dr.		7,500
	To Capital Reserve A/c				7,500
	(Prof it on reissue transferred to Capital Reserve)

 

Working Notes:

WN 1: Calculation of  Amount unpaid on Allotment

Amount received on application (5,000×3)          = 15,000

Less: Amount adjusted on application (2,500×3) =  7,500

Excess amount received on application                =  7,500

 

Amount due on allotment (2,500×4.5) = 11,250

Amount unpaid on allotment               = 3,750 (11,250 – 7,500)

 

Note:

` 7,500 received on application will be transferred to allotment, but first of  all we have to transfer such amount to Capital A/c and rest would be transferred to Securities Premium A/c. Capital on allotment is ` 5,000 (2,500×2) that is fully received and balance amount of  advance ` 2,500 will be transferred to Securities Premium A/c. So, amount of  premium unpaid is ` 3,750 (2,500×2.5 –2,500).

 

Amal had applied for 7,000 shares of  `10 each at a premium of  `5 per share. He was allotted 4,000 shareson pro rata basis. After having paid `3 per share on application, he did not pay allotment money of `7 per share (including premium) and on his subsequent failure to pay the first call of  `3 per share, hisshares were forfeited. Calls not received were transferred to Calls-in-Arrears Account. These shares werereissued at the rate of  8 per share credited as fully paid.

Pass Journal entries to record the forfeiture and reissue of  shares.

 

Answer:

Aman Applied Capital 7,000 shares of  `10 each

Allotted 4,000 shares
Payable as:

`	3	On application
`	7	On allotment (With `5 Premium)
`	3	On first and final call
`	2	On first and final call
	15

 

Journal
Date	Particulars		L.F.	Debit  (`)	Credit  (`)
	Share Capital A/c (4,000×8)	Dr.		32,000
	To Forfeited Shares A/c				21,000
	To Calls-In-Arrears A/c (4,000×3)				11,000
	(Being share forfeited for Non Payment of  allotment and First Call of  4,000 shares)
	Bank A/c  (4,000×8)	Dr.		32,000
	Forfeited Shares A/c (4,000×2)			8,000
	To Share Capital A/c (4,000×10)				40,000
	(Being 4,000 shares forfeited reissued at the rate of  `8 per share credited as fully paid)
	Forfeited Shares A/c	Dr.		13,000
	To Capital Reserve A/c				13,000
	(Being full amount Forfeited on 2,000 Shares reissued, transferred to Capital Reserve)