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Question 38 Chapter 8 of +2-Part-1
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38. (Forfeiture/Reissue) Prince Industries Ltd. has an authorised capital of Rs. 50,00,000 divided into 5,00,000 equity shares of Rs. 10 each. It invited applications for 1,00,000 shares of Rs. 10 each at a premium of Rs. 3 per share, payable as under:
Rs. 2 On application
Rs. 5 On allotment (including premium)
Rs. 4On first call and
Rs. 2On final call.
Applications were received for 1,50,000 shares. The application money on 30,000 shares was refunded. Whole of the shares were allotted to the applicants for 1.20,000 shares excess application money being adjusted towards allotment. X the holder of 200 shares failed to pay the first call money and his shares were forfeited. Y the holder of 300 shares, failed to pay both the calls and his shares were also forfeited after the final call was made. All the forfeited shares were reissued to Z credited as fully paid for RS. 9 per share. Show the necessary journal entries and cash book entries to record the above transactions and draw up the balance sheet of the company.
The solution of Question 38 Chapter 8 of +2 Part-1: –
| Journal |
|||||
| Date | Particulars |
L.F. | Debit | Credit | |
| A) | Equity Share Application A/c (1,20,000 X 2) | Dr. | 2,40,000 | ||
| To Equity Share capital A/c | 2,00,000 | ||||
| To Equity Share Allotment A/c | 40,000 | ||||
| (Being the transfer of application money on 1,00,000 shares @ Rs. 2 per share ) | |||||
| C) | Equity Share Allotment A/c (40,000 X 2) | Dr. | 5,00,000 | ||
| To Equity Share capital A/c | 2,00,000 | ||||
| To Security Premium A/c | 3,00,000 | ||||
| (Being allotment money due on allotment of 1,00,000 shares @ Rs. 5 each including premium @ Rs. 3 per share ) | |||||
| D) | Equity Share first Call A/c (1,00,000 X 4) | Dr. | 4,00,000 | ||
| To Equity Share capital A/c | 4,00,000 | ||||
| (Being amount due on first call of 1,00,000 share @ Rs.4 per share ) | |||||
| E) | Equity Share capital A/c ( 200 X 8) | Dr. | 1,600 | ||
| To Equity Share Forfeited A/c ( 200 X 4) | 800 | ||||
| To Equity Share first call A/c ( 200 X 4) | 800 | ||||
| (Being forfeitures of 200 shares of Rs. 10 Rs. 8 called up on A/c for non payment of the first call of Rs. 4 each ) | |||||
| F) | Equity Share final Call A/c (99,800 X 2) | Dr. | 1,99,600 | ||
| To Equity Share capital A/c | 1,99,600 | ||||
| (Being amount due on final call of 99,800 share @ Rs.2 per share) | |||||
| G) | Equity Share final Call A/c (99,800 X 2) Dr. | Dr. | 3,000 | ||
| To Equity Share Forfeited A/c ( 300 X 4) | 1,200 | ||||
| To Equity Share first call A/c ( 300 X 4) | 1,200 | ||||
| To Equity Share final call A/c ( 300 X 2) | 600 | ||||
| (Being forfeitures of 300 shares of Rs. 10 each fully called up on A/c for non payment of the first call of Rs. 4 each & Second Call Rs. 2 each) | |||||
| H) | Share Fortified A/c | Dr. | 500 | ||
| To Equity Share capital A/c | 500 | ||||
| (Being loss of the 500 shares reissued) | |||||
| I) | Share Fortified A/c | Dr. | 1,500 | ||
| To Capital Reserve A/c | 1,500 | ||||
| (Being balance in share fortified transferred to capital reserve) | |||||
Cash Book (Bank Column Only): –
| Particulars |
Rs. | Particulars | Rs. |
| To Equity Share Application A/c | 3,00,000 | By Equity Share Application A/c | 60,000 |
| (On 1,50,000 shares @ Rs. 2 each) | (On 30,000 shares @ Rs. 2 each) | ||
| To Equity Share Allotment A/c | 4,60,000 | By Balance c/d | 13,01,500 |
| (On 1,00,000 shares @ Rs. 5 each less Rs. 40,000 received in advance of app.) | |||
| To Equity Share First call A/c | 3,98,000 | ||
| (On 99,500 shares @ Rs. 4 each) | |||
| To Equity Share Final call A/c | 1,99,000 | ||
| (On 99,500 shares @ Rs. 2 each) | |||
| To Equity Share Capital A/c | 4,500 | ||
| (On 500 shares @ Rs. 3 each) | |||
| 13,61,500 | 13,61,500 |
Prince Industries Ltd. Balance Sheet: –
| Date | Particulars |
Note no/. | FIG. RELATING TO CURRENT REPORTNG PERIOD | FIG. RELATING TO PREVIOUS REPORTNG PERIOD |
| i) | Equity & Liability | |||
| Shareholders fund | ||||
| Share Capital | 1 | 10,00,000 | ||
| Reserve & Surplus | 2 | 3,01,500 | ||
| Total | 13,01,500 | |||
| ii) | Assets | |||
| Non -Current Assets | ||||
| Cash & Cash equivalent | 3 | 13,01,500 | ||
| Total | 13,01,500 |
Note 1: Shared capital
| Particulars |
Current year | Previous year |
| Authorized capital | ||
| (5,00,000 shares of Rs. 10 each) | 50,00,000 | |
| Issued , subscribed , called & paid up Capital | ||
| (1,00,000 shares of Rs. 10 each fully paid & called up) | 10,00,000 | |
| Total | 10,00,000 |
Note 2: Reserve & surplus
| Particulars |
Current year | Previous year |
| Secruity premium | 3,00,000 | |
| Capital Reserve | 1,500 | |
| Total | 3,01,000 |
Note 3: Cash & Cash Equivalent
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| Particulars |
Current year | Previous year |
| Cash At Bank | 13,01,500 | |
| Total | 3,01,500 |
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It all about Question 38 Chapter 8 of +2-Part-1, If you have any problem please comment below.
Forfeiture of shares – Its accounting Entries
End of Solution
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Question 08 Chapter 8 of +2 Part-1 – USHA Publication 12 Class Part – 1
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Chapter-Wise Solution of Usha Publication Accountancy – Part 2 Class 12 – Session 2024-25 as per the PSEB curriculum
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Chapter No. 8 – Company Accounts (Share Capital)
Chapter No. 9 – Company Accounts (Issue of Debentures)
Chapter No. 10 – Company Accounts (Redemption of Debentures)
Chapter No. 11 – Financial Statements of a Company
Chapter No. 12 – Financial Statement Analysis
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Chapter No. 14 – Accounting Ratios
Chapter No. 15 – Cash Flow Statement
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- Chapter No. 1 – Company Accounts (Share Capital)
- Chapter No. 2 – Issue of Debentures
- Chapter No. 3 – Redemption of Debentures
- Chapter No. 4 – Financial Statements of a Company (Balance Sheet Only)
- Chapter No. 5 -Financial Statement Analysis
- Chapter No. 6 – Tools/Methods of Financial Analysis
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