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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Amal had applied for 7,000 shares of ₹10 each at a premium of ₹5 per share. He was allotted 4,000 shares on a pro-rata basis. After paying ₹3 per share on application, he did not pay the allotment money of ₹7 per share (including premium), and on his subsequent failure to pay the first call of ₹3 per share, his shares were forfeited. Calls not received were transferred to Calls-in-Arrears Account. These shares were reissued at the rate of ₹8 per share, credited as fully paid. Pass Journal entries to record the forfeiture and reissue of shares.
Amal applied for 7,000 shares of ₹10 each and was allotted 4,000 shares, payable: Application ₹3, Allotment ₹7 (including ₹5 premium), First Call ₹3, Final Call ₹2 (total ₹15, i.e. ₹10 face value + ₹5 premium).
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Share Capital A/c (4,000 × ₹8) Dr. | 32,000 | |||
| Securities Premium Reserve A/c Dr. | 19,000 | |||
| To Share Allotment A/c | 19,000 | |||
| To Share First Call A/c (4,000 × ₹3) | 12,000 | |||
| To Forfeited Shares A/c | 20,000 | |||
| (4,000 shares forfeited for non-payment of allotment and first call money) | ||||
| Bank A/c (4,000 × ₹8) Dr. | 32,000 | |||
| Forfeited Shares A/c (4,000 × ₹2) Dr. | 8,000 | |||
| To Share Capital A/c (4,000 × ₹10) | 40,000 | |||
| (4,000 forfeited shares reissued at ₹8 per share, credited as fully paid) | ||||
| Forfeited Shares A/c Dr. | 12,000 | |||
| To Capital Reserve A/c | 12,000 | |||
| (Balance in Forfeited Shares Account, all 4,000 shares having been reissued, transferred to Capital Reserve) |
Working Note: Application money received on 7,000 shares = ₹21,000; retained for the 4,000 allotted shares = ₹12,000; excess = ₹9,000. Of this excess, ₹8,000 (4,000 × ₹2) fully covers the face value due on allotment, and the remaining ₹1,000 partly covers the ₹20,000 premium due, leaving ₹19,000 premium unpaid. Amount actually received (face value) = Application retained ₹12,000 + Allotment face value covered ₹8,000 = ₹20,000. Capital Reserve = ₹20,000 (Forfeited Shares credit) − ₹8,000 (discount on reissue) = ₹12,000.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.91 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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