Question 3 Chapter 8 of +2-Part-1 – USHA Publication 12 Class Part – 1

Q-37- CH-8 - Usha +2 Book 2018 - Solution-min

Question 37 Chapter 8 of +2-Part-1

37. (Forfeiture/Reissue at Discount) C. Ltd. invited applications for 20,000 Equity shares Rs. 10 each payable as under: On application Rs. 2 per share, on Allotment Rs. 2 per share, on First call Rs. 3 per share, on Final call Rs. 3 per share.

The entire issue was subscribed for and paid with the following exceptions;
(i)  P, who was allotted 200 shares, failed to pay the money due on allotment and calls.
(ii) Q, who held 150 shares, did not pay the first call and second call.
(iii) R’ who held 50 shares, did not pay the amount on second call,
The Board of Directors passed a resolution forfeiting all the shares of P, Q and R. These shares were subsequently re-issued as fully paid at a discount of 20%.
Give Journal entries to record transactions in books of C Ltd.

The solution of Question 37 Chapter 8 of +2 Part-1: –

Journal
Date   Particulars
L.F. Debit Credit
A) Bank A/c (20,000 X 2) Dr.   40,000  
  To Share Application A/c       40,000
  (Being the receipt of application money on 20,000 shares @ Rs.2 per share )        
           
B) Share Application A/c Dr.   40,000  
  To Share capital A/c     40,000
  (Being the transfer of application money)        
           
c) Share Allotment A/c (20,000 X 2) Dr.   40,000  
  To Share capital A/c     40,000
  (Being allotment money due on allotment of 20,000 shares @ Rs. 2 per share )      
           
D) Bank A/c (19,800 X 2) Dr.   39,600  
  To Share allotment A/c     39,600
  (Being allotment money received on 19,860 shares)      
         
E) Share first Call A/c (20,000 X 3) Dr.   60,000  
  To Share capital A/c     60,000
  (Being amount due on first call of 20,000 share @ Rs. 3 per share)      
           
F) Bank A/c (19,650 X 3) Dr.   58,950  
  To Share first Call A/c     58,950
  (Being amount received on first call of 19,650 share @ Rs. 3 per share )      
         
G) Share Second & final Call A/c (20,000 X 3) Dr.   60,000  
  To Share capital A/c     60,000
  (Being amount due on final call of 20,000 share @ Rs. 3 per share)      
         
H) Bank A/c (19,600 X 3) Dr.   58,800  
  To Share Second & final Call A/c     58,800
  (Being amount received on final call of 19,600 share @ Rs. 3 per share )      
         
I) Share capital A/c ( 400 X 10) Dr.   4,000  
  To Share Allotment A/c     400
  To Share first call A/c ( 200 X 3+ 150X 3)     1,050
  To Share Second final call A/c ( 200 X 3 +150 X 3 +50 X 3)     1,200
  To Share Forfeited A/c ( 200 X 2+ 150 X (2+2) +50 X (2+2+3))     1,350
  (Being 400 shares fortified as per board reso. No.)      
         
J) Bank A/c (400 X 8 ) Dr.   3,200  
  Share Fortified A/c (400X2) Dr.   800  
  To Share capital A/c     4,000
  (Being 400 shares reissued @ 20 % discount )      
         
K) Share Fortified A/c (1,350-800) Dr.   550  
  To Capital Reserve A/c     550
  (Being balance in share fortified transferred to capital reserve)      

It all about Question 37 Chapter 8 of +2-Part-1, If you have any problem please comment below.

Forfeiture of shares – Its accounting Entries

You can also Check out the solved question of other Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 3 Chapter 8 of +2-Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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