Question

Rao Ltd. forfeited 750 equity shares of ₹ 10 each for non-payment of first call of ₹ 3 per share (including premium of ₹ 1 per share). The second and final call of ₹ 3 per share was not yet made. Of the forfeited shares, 500 were re-issued for ₹ 2,500, ₹ 7 per share paid-up. Pass necessary journal entries for the above transactions in the books of Rao Ltd.

Hint:

When shares are forfeited, the amount received is transferred to Share Forfeiture A/c. On re-issue, discount is debited to Share Forfeiture A/c. The remaining balance on re-issued shares is transferred to Capital Reserve.

Answer 1