T.S. Grewal Class 12 Vol 2 Chapter 1 Q.50 - Share Capital

Question 50

Vikram Ltd. forfeited 5,000 shares of Rahul (who had applied for 6,000 shares and was allotted 5,000) for non-payment of allotment money of ₹5 per share and first and final call of ₹2 per share. Only the application money of ₹3 was paid by him. Of these, 3,000 shares were reissued at ₹12 per share as fully paid. Pass the entries for forfeiture and reissue. (CBSE Sample Paper 2023)

Solution

JOURNAL (Books of Vikram Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Share Capital A/c (5,000 × ₹10)    Dr.		50,000
	To Share Forfeited A/c (6,000 × ₹3)			18,000
	To Share Allotment A/c			22,000
	To Share First and Final Call A/c			10,000
	(5,000 shares forfeited for non-payment of allotment and call money; the ₹18,000 application money originally paid on his 6,000 shares applied for is retained)
	Bank A/c (3,000 × ₹12)    Dr.		36,000
	To Share Capital A/c (3,000 × ₹10)			30,000
	To Securities Premium Reserve A/c (3,000 × ₹2)			6,000
	(3,000 forfeited shares reissued at ₹12 per share, fully paid)
	Share Forfeited A/c    Dr.		10,800
	To Capital Reserve A/c			10,800
	(Forfeited amount on the 3,000 reissued shares transferred to Capital Reserve)

Working Note: Forfeited amount per share = 18,000 ÷ 5,000 = ₹3.60; for the 3,000 reissued shares = 3,000 × ₹3.60 = ₹10,800.

Note: The source’s reissue entry credited ₹36,000 to Share Capital and a further ₹6,000 to Securities Premium, which would double-count the ₹6,000 premium against the ₹36,000 actually received; corrected above to split the ₹36,000 received into ₹30,000 capital and ₹6,000 premium.