T.S. Grewal Class 12 Vol 2 Chapter 1 Q.63 - Share Capital

Question 63

A company forfeited 4,000 shares of ₹10 each, fully called-up, on which application money of ₹3 each had been paid. Of these, 2,000 shares were reissued as fully paid-up for ₹18,000. Pass the necessary Journal entries. (CBSE 2023)

Solution

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Share Capital A/c (4,000 × ₹10)    Dr.		40,000
	To Forfeited Shares A/c (4,000 × ₹3)			12,000
	To Calls-in-Arrears A/c (4,000 × ₹7)			28,000
	(4,000 fully called-up shares forfeited; only the application money of ₹3 per share had been received)
	Bank A/c    Dr.		18,000
	Forfeited Shares A/c    Dr.		2,000
	To Share Capital A/c (2,000 × ₹10)			20,000
	(2,000 forfeited shares reissued as fully paid-up for ₹18,000, i.e. at a ₹1 discount per share)
	Forfeited Shares A/c    Dr.		4,000
	To Capital Reserve A/c			4,000
	(Balance of Forfeited Shares A/c on the reissued shares transferred to Capital Reserve)

Working Note: Forfeited amount attributable to the 2,000 reissued shares = 12,000 × 2,000/4,000 = ₹6,000, less the ₹2,000 discount on reissue = ₹4,000 transferred to Capital Reserve.