Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Arvind Ltd. issued 20,000 shares of ₹10 each at a premium of ₹2 per share, payable: on Application ₹6, on Allotment ₹3 (including premium), on First Call ₹2, on Second and Final Call ₹1. Applications were received for 30,000 shares. Applications for 6,000 shares were rejected, and pro-rata allotment was made to the remaining applicants. Abhay, who was allotted 500 shares, failed to pay the allotment money, and on his subsequent failure to pay the first call, his shares were forfeited. Of these, 300 shares were reissued as fully paid-up for ₹6 per share. Journalise the transactions to record the forfeiture and reissue of shares.
Abhay was allotted 500 shares; applied for 500 × 30,000 ÷ 25,000 = 600 shares (pro-rata ratio of 25,000 shares allotted for 24,000 valid applicants... i.e. 5:6). Money received on application from Abhay = 600 × ₹6 = ₹3,600. Application money retained for his 500 allotted shares = 500 × ₹6 = ₹3,000. Excess application money = ₹600, adjusted against allotment (1,500 − 600 already paid = ₹900 unpaid on allotment).
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Share Capital A/c (500 × ₹9) Dr. | 4,500 | |||
| Securities Premium Reserve A/c Dr. | 900 | |||
| To Forfeited Shares A/c | 3,500 | |||
| To Share Allotment A/c | 900 | |||
| To Share First Call A/c (500 × ₹2) | 1,000 | |||
| (500 shares of Abhay forfeited for non-payment of allotment and first call money) | ||||
| Bank A/c (300 × ₹6) Dr. | 1,800 | |||
| Forfeited Shares A/c (300 × ₹4) Dr. | 1,200 | |||
| To Share Capital A/c (300 × ₹10) | 3,000 | |||
| (300 forfeited shares reissued at ₹6 per share, fully paid-up) | ||||
| Forfeited Shares A/c Dr. | 900 | |||
| To Capital Reserve A/c | 900 | |||
| (Full forfeited amount on the 300 reissued shares transferred to Capital Reserve) |
Working Note: Amount received (face value basis) = application money retained for 500 shares (₹3,000) + face-value portion of allotment, fully covered by the excess application money (₹500) = ₹3,500 (Forfeited Shares credit). The remaining ₹900 unpaid on allotment is entirely the unrecovered securities premium, reversed via the Securities Premium Reserve debit.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.100 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.100 - Share Capital" instantly.