T.S. Grewal Class 12 Vol 2 Chapter 1 Q.70 - Share Capital

Question 70

The Hindustan Manufacturing Ltd. had a total subscribed capital of ₹10,00,000 in Equity Shares of ₹10 each, of which ₹7.50 was called-up. A final call of ₹2.50 was made and all the amount was paid except two calls of ₹2.50 each in respect of 100 shares held by D. These shares were forfeited and reissued at ₹8 per share. Pass the necessary Journal entries (including that of cash) to record the final call, forfeiture, and reissue of the forfeited shares. Also prepare the Balance Sheet of the company.

Solution

JOURNAL (Books of Hindustan Manufacturing Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Equity Share Final Call A/c (1,00,000 × ₹2.50)    Dr.		2,50,000
	To Equity Share Capital A/c			2,50,000
	(Final call of ₹2.50 per share made on 1,00,000 shares)
	Bank A/c    Dr.		2,49,750
	Calls-in-Arrears A/c    Dr.		250
	To Equity Share Final Call A/c			2,50,000
	(Final call received on 99,900 shares; D’s 100 shares in arrears)
	Equity Share Capital A/c (100 × ₹10)    Dr.		1,000
	To Share Forfeiture A/c (100 × ₹5)			500
	To Calls-in-Arrears A/c (100 × ₹5)			500
	(100 shares of ₹10 each forfeited for non-payment of two calls of ₹2.50 each)
	Bank A/c (100 × ₹8)    Dr.		800
	Share Forfeiture A/c    Dr.		200
	To Equity Share Capital A/c (100 × ₹10)			1,000
	(100 shares reissued at ₹8 per share, fully paid-up)
	Share Forfeiture A/c    Dr.		300
	To Capital Reserve A/c			300
	(Balance in Share Forfeiture Account after reissue transferred to Capital Reserve)

As per Schedule III of the Companies Act, 2013, the Balance Sheet is presented as follows:

Hindustan Manufacturing Ltd. Balance Sheet

Particulars	Note No.	₹
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	10,00,000
b. Reserves and Surplus	2	300
2. Non-Current Liabilities		—
3. Current Liabilities		—
Total		10,00,300
II. Assets
1. Non-Current Assets		—
2. Current Assets
a. Cash and Cash Equivalents	3	10,00,300
Total		10,00,300

NOTES TO ACCOUNTS

Note No.	Particulars	₹
1	Share Capital
	Authorised Share Capital: 1,00,000 shares of ₹10 each	10,00,000
	Issued Share Capital: 1,00,000 shares of ₹10 each	10,00,000
	Subscribed, Called-up and Paid-up: 1,00,000 shares of ₹10 each	10,00,000
2	Reserves and Surplus — Capital Reserve	300
3	Cash and Cash Equivalents — Cash at Bank	10,00,300

Working Note: Share Forfeiture credit (100 × ₹5) = ₹500; less Share Forfeiture debit on reissue (100 × ₹2) = ₹200; balance transferred to Capital Reserve = ₹300.