Question

Pass necessary journal entries for forfeiture and reissue of shares in the following cases: Neon Ltd. forfeited 2,000 shares of ₹ 10 each issued at a premium of ₹ 2 per share for non-payment of allotment money of ₹ 5 per share (including premium). The first and final call of ₹ 2 per share was not yet made. Out of these, 1,500 shares were reissued at ₹ 7 per share, ₹ 8 paid up. Mamta Ltd. forfeited 3,000 shares of ₹ 10 each on which the first call of ₹ 3 per share was not received. The second and final call of ₹ 1 per share was not yet called. Out of these, 2,000 shares were reissued at ₹ 9 per share, ₹ 9 paid up.

Hint:

In forfeiture and reissue, ensure to calculate amounts forfeited, amounts reissued, and profits transferred to Capital Reserve accurately, keeping in mind the shares’ paid-up value.

Answer 1

Journal Entries: \[ \begin{array}{|l|p{8cm}|r|r|} \hline \textbf{Date} & \textbf{Particulars} & \textbf{Dr (₹)} & \textbf{Cr (₹)} \\ \hline \multicolumn{4}{|l|}{\textbf{Case (i): For Neon Ltd.}} \\ \hline 2023 Mar 31 & Share Capital A/c (2,000 \times ₹ 8) & 16,000 & \\ & Securities Premium A/c (2,000 \times ₹ 2) & 4,000 & \\ & To Share Forfeiture A/c & & 15,000 \\ & To Share Allotment A/c (2,000 \times ₹ 5) & & 5,000 \\ & \textit{(Forfeiture of 2,000 shares due to non-payment of allotment money)} & & \\ \hline 2023 Mar 31 & Bank A/c (1,500 \times ₹ 7) & 10,500 & \\ & Share Forfeiture A/c (1,500 \times ₹ 1) & 1,500 & \\ & To Share Capital A/c (1,500 \times ₹ 8) & & 12,000 \\ & \textit{(Reissue of 1,500 shares at ₹ 7, with ₹ 8 paid up)} & & \\ \hline 2023 Mar 31 & Share Forfeiture A/c & 7,500 & \\ & To Capital Reserve A/c & & 7,500 \\ & \textit{(Transfer of profit from reissued forfeited shares to Capital Reserve)} & & \\ \hline \multicolumn{4}{|l|}{\textbf{Case (ii): For Mamta Ltd.}} \\ \hline 2023 Mar 31 & Share Capital A/c (3,000 \times ₹ 7) & 21,000 & \\ & To Share Forfeiture A/c & & 9,000 \\ & To Share First Call A/c (3,000 \times ₹ 3) & & 12,000 \\ & \textit{(Forfeiture of 3,000 shares due to non-payment of first call money)} & & \\ \hline 2023 Mar 31 & Bank A/c (2,000 \times ₹ 9) & 18,000 & \\ & To Share Capital A/c (2,000 \times ₹ 9) & & 18,000 \\ & \textit{(Reissue of 2,000 shares at ₹ 9, fully paid up)} & & \\ \hline 2023 Mar 31 & Share Forfeiture A/c & 6,000 & \\ & To Capital Reserve A/c & & 6,000 \\ & \textit{(Transfer of profit from reissued forfeited shares to Capital Reserve)} & & \\ \hline \end{array} \]