T.S. Grewal Class 12 Vol 2 Chapter 1 Q.69 - Share Capital

Question 69

R.P. Ltd. forfeited 1,500 shares of Rahim of ₹10 each, issued at a premium of ₹3 per share, for non-payment of allotment and first call money. On these shares, the amount was payable as follows: on application ₹3 per share, on allotment (including premium) ₹5 per share, on first call ₹3 per share, and on final call the balance. The final call has not been made. 1,000 of the forfeited shares were reissued for ₹8,500, as fully paid-up. Record the necessary Journal entries in the books of R.P. Ltd. (CBSE 2020)

Solution

JOURNAL (Books of R.P. Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Equity Share Capital A/c (1,500 × ₹8)    Dr.		12,000
	Securities Premium Reserve A/c (1,500 × ₹3)    Dr.		4,500
	To Share Forfeiture A/c			4,500
	To Share Allotment A/c (1,500 × ₹5)			7,500
	To Share First Call A/c (1,500 × ₹3)			4,500
	(1,500 shares of ₹10 each, issued at a premium of ₹3, forfeited for non-payment of allotment and first call money)
	Bank A/c    Dr.		8,500
	Share Forfeiture A/c    Dr.		1,500
	To Equity Share Capital A/c (1,000 × ₹10)			10,000
	(1,000 of the forfeited shares reissued for ₹8,500, fully paid-up)
	Share Forfeiture A/c    Dr.		1,500
	To Capital Reserve A/c			1,500
	(Balance in Share Forfeiture Account, for the 1,000 reissued shares, transferred to Capital Reserve)

Working Note: Forfeited amount per share = 4,500 ÷ 1,500 = ₹3. For the 1,000 reissued shares = 1,000 × ₹3 = ₹3,000, less ₹1,500 discount on reissue = ₹1,500 transferred to Capital Reserve.