T.S. Grewal Class 12 Vol 2 Chapter 1 Q.85 - Share Capital

Question 85

The Directors of a company forfeited 300 shares of ₹10 each, issued at a premium of ₹3 per share, for non-payment of the first call money of ₹2 per share. The final call of ₹2 per share has not been made. Half the forfeited shares were reissued for ₹1,500, as fully paid-up. Record the Journal entries for the forfeiture and reissue of shares. (CBSE 2009)

Solution

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Share Capital A/c (300 × ₹8)    Dr.		2,400
	To Share Forfeiture A/c (300 × ₹6)			1,800
	To Calls-in-Arrears A/c (300 × ₹2)			600
	(300 shares, ₹8 called-up, forfeited for non-payment of the ₹2 first call)
	Bank A/c    Dr.		1,500
	To Share Capital A/c			1,500
	(150 shares reissued, fully paid-up, for ₹1,500)
	Share Forfeiture A/c    Dr.		900
	To Capital Reserve A/c			900
	(Balance in Share Forfeiture Account of the 150 reissued shares transferred to Capital Reserve)

Working Note: Share Forfeiture credit ₹6/share × 150 shares reissued (at par, no discount) = ₹900 transferred to Capital Reserve.