12th | Ts grewal 2022-2023 Question 53 to 56 | Share Capital - Company Accounting

Question 53:

Star Ltd. forfeited 500 Equity Shares of  ` 100 each for non-payment of first call of  ` 30 per share . The final call of  ` 10 per share was not yet made. Out of these, 60% shares were reissued for  ` 39,000 fully paid. journalise the forfeiture and reissue of shares.

 

Answer:

Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Equity Share Capital A/c  (500×90)	Dr.		45,000
	To  Equity Share 1st Call A/c (500×30)				15,000
	To Share Forfeited A/c (500×60)				30,000
	( 500 equity shares forfeited for non-payment of final call)
	Bank A/c (300×130)	Dr.		39,000
	To Equity Share Capital A/c (300×100)				30,000
	To Security Premium Reserve A/c (300×30)				9,000
	(300 shares are reissued @130 per share)
	Share Forfeited A/c	Dr.		18,000
	To Capital Reserve A/c				18,000
	( Profit on reissue of 300 shares transferred to Capital Reserve)

 

Working Note:

 

Amount transferred to Capital Reserve

Shares Re-issued = 300

Shares Forfeited = 500

Amount forfeited in respect of 300 shares = Amount Forfeited × Shares Re-issued Shares Forfeited

                                                                    = 30,000×300500=18,000

 

Question 54:

Super Star Ltd. makes an issue of 10,000 Equity Shares of  ` 100 each, payable as:

On application and allotment	` 50 per share,
On first call	` 25 per share,
On second and final call	` 25 per share.

Members holding 400 shares did not pay the second and final call and the shares are duly forfeited, 200 of which are reissued as fully paid-up @ ` 50 per share. Pass journal entries in the books of the company.

Answer:

Book of Super Star Limited Journal
Date	Particulars		L.F.	Debit `	Credit  `
	Bank A/c	Dr.		5,00,000
	To Equity Share Application and Allotment A/c				5,00,000
	(Share Application and Allotment money received for 10,000 shares at  ` 50 each)
	Equity Share Application and Allotment A/c	Dr.		5,00,000
	To Equity Share Capital A/c				5,00,000
	(Share Application and Allotment money transferred to Equity Share Capital Account)
	Equity Share First Call A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,50,000
	(Share First Call due on 10,000 shares of  ` 25 each)
	Bank A/c	Dr.		2,50,000
	To Equity Share First-Call A/c				2,50,000
	(First Call money received)
	Equity Share Final Call A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,50,000
	(Equity Share Final Call due on 10,000 shares of  ` 25 each)
	Bank A/c	Dr.		2,40,000
	Calls-in-Arrears A/c	Dr.		10,000
	To Equity Share Final Call A/c				2,50,000
	(Share Final Call of  ` 25 per share received on 9,600 shares and holders of 400 shares failed to pay it)
	Equity Share Capital A/c	Dr.		40,000
	To Share Forfeiture A/c				30,000
	To Calls-In-Arrears A/c				10,000
	(400 shares of  ` 100 each forfeited for the non-payment final call  ` 25 per share)
	Bank A/c	Dr.		10,000
	Share Forfeiture A/c	Dr.		10,000
	To Equity Share Capital A/c				20,000
	(200 shares of  ` 100 each re-issued at  ` 50 per share fully paid-up)
	Share Forfeiture A/c	Dr.		5,000
	To Capital Reserve A/c				5,000
	(Balance in Share Forfeiture of 200 shares of after re-issue, transferred to Capital Reserve)

 

Working Note-

Share Forfeiture	`	75	Cr.
Share Forfeiture	`	50	Dr.
Balance in Share Forfeiture Account for re-issued shares	`	25	Cr. per share

Capital Reserve = Balance in Share Forfeiture Account for re-issued shares × Number of Share reissued

=  ` 25 × 200 =  ` 5,000

 

Question 55:

Give necessary journal entries:
   (i) The Directors of Devendra Ltd. resolved on 1st January, 2010 that Equity Shares of  ` 10 each,  ` 8 paid-up be forfeited for non-payment of final call of  ` 2. On 1st February, 60 of these shares were reissued @  ` 7 per share as fully paid-up.
   (ii) Virender Limited forfeited 20 shares of  ` 100 each( ` 60 called-up) issued at par to Mukesh on which he had paid  ` 20 per share . Out of these, 15 shares were reissued to Sanjeev as  ` 60 paid-up for  ` 45 per share.

Answer:

(i)	Book of Devendra Limited
Journal
Date		Particulars		L.F.	Debit `	Credit `
2010
Jan. 01		Equity Share Capital A/c	Dr.		1,000
		To Share Forfeiture A/c				800
		To Calls-in-Arrears A/c				200
		(100 shares of  ` 10 each forfeited for the non-payment of  ` 2 per share)
Feb. 01		Bank A/c	Dr.		420
		Share Forfeiture A/c	Dr.		180
		To Equity Share Capital A/c				600
		(60 shares of  ` 10 each re-issued at  ` 7 per share, fully paid-up)
		Share Forfeiture A/c	Dr.		300
		To Capital Reserve A/c				300
		(Balance in Share Forfeiture Account of 60 shares after re-issue transferred to Capital Reserve)

 

Working Note:

 

Forfeiture of re-issued shares

Share Forfeiture Credit	`	8	per share
Share Forfeiture Debit	`	3	per share
Balance in Share Forfeiture after re-issue		5	per share

General Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued

=  ` 5 × 60

=  ` 300

 

(ii)	Book of Virender Limited
	Journal
Date		Particulars		L.F.	Debit `	Credit `
		Share Capital A/c	Dr.		1,200
		To Share Forfeiture A/c				400
		To Calls-in-Arrears A/c				800
		(20 shares of  ` 100 each  ` 60 called-up forfeited for the non-payment of  ` 40 per share)
		Bank A/c	Dr.		675
		Share Forfeiture A/c	Dr.		225
		To Share Capital A/c				900
		(15 shares of  ` 100 each re-issued for  ` 45 per share as  ` 60 paid-up)
		Share Forfeiture A/c	Dr.		75
		To Capital Reserve A/c				75
		(Balance in Share Forfeiture of 15 re-issued shares transferred to Capital Reserve)

 

Working Note:

 

Forfeiture of reissued shares
Share Forfeiture Credit (at the time of forfeiture )	`	20	per share
Share Forfeiture Debit (at the time of re-issue)	`	15	per share
Balance in Share Forfeiture after re-issue	`	5	per share

Capital Reserve = Balance in Share Forfeiture after re-issue (per share) × No. of shares reissued

=  ` 5 × 15 Shares

=  ` 75

 

 

Question 56:

Show the forfeiture and reissue entries under each of the following cases:

(i) KBC  Ltd. forfeited 300 shares of  ` 10 each,  ` 8 called-up held by Mr.  A for non-payment of second call money of  ` 3 per share. These shares were reissued to Mr. Z for  ` 10 per share as fully paid-up.
(ii) KK Ltd. forfeited 400 shares of  ` 10 each, fully called-up, held by Mr. B for non-payment of final call money of  ` 4 per share. These shares were reissued to Mr. T at  ` 12 per share as fully paid-up.
 (iii) Light Ltd. forfeited 250 shares of  ` 10 each, fully called-up held by Mr. C for non-payment of allotment money of   ` 3 per share and first and final call money of  ` 4 per share. These shares were reissued @  ` 8 per share as fully paid-up to Mr. P.

Answer:

(i)	Books of KBC Limited Journal
Date		Particulars		L.F.	Debit  ( ` )	Credit  ( ` )
		Share Capital	Dr.		2,400
		To Share Forfeiture A/c				1,500
		To Calls-in-Arrears A/c				900
		(300 shares of  ` 10 each on which had called  ` 8, forfeited for non-payment of second call  ` 3 per share)
		Bank A/c	Dr.		3,000
		To Share Capital A/c				3,000
		(300 shares of  ` 10 each re-issued)
		Share Forfeiture A/c	Dr.		1,500
		To Capital Reserve A/c				1,500
		(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

Working Notes-

 

Share Forfeiture Credit (at the time of forfeiture of shares)	1,500
Less: Share Forfeiture Debit (at the time of re-issue shares)	NIL
Balance in Share Forfeiture after re-issue of shares	1,500

 

Capital Reserve = Balance in Share Forfeiture of re-issued shares

=  ` 1,500

(ii)	Books of KK Limited Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
	Share Capital A/c	Dr.		4,000
	To Share Forfeiture A/c				2,400
	To Calls-in-Arrears A/c				1,600
	(400 shares of  ` 10 forfeited for the non-payment of final call  ` 4 per share)
	Bank A/c	Dr.		4,800
	To Share Capital A/c				4,000
	To Securities Premium A/c				800
	(400 shares of  `10 each re-issued at  ` 12 per share as fully paid-up)
	Share Forfeiture A/c	Dr.		2,400
	To Capital Reserve A/c				2,400
	(Balance of Share Forfeiture after re-issue transferred to Capital Reserve)

 

Working Notes-

 

Share Forfeiture Credit (at the time of forfeiture of shares)	2,400
Less: Share Forfeiture Debit (at the time of re-issue shares)	NIL
Balance in Share Forfeiture after re-issue of shares	2,400

 

Capital Reserve = Balance in Share Forfeiture of re-issued shares

=  ` 2,400

(iii)	Books of Light Limited Journal
Date		Particulars		L.F.	Debit  ( ` )	Credit  ( ` )
		Share Capital A/c	Dr.		2,500
		To Share Forfeiture A/c (250×3)				750
		To Calls-in-Arrears A/c				1,750
		(250 shares of  ` 10 each forfeited for the non-payment  ` 7 per share)
		Bank A/c	Dr.		2,000
		Share Forfeiture A/c	Dr.		500
		To Share Capital A/c				2,500
		(250 shares of  ` 10 each re-issued for  ` 8 per share as fully paid-up )
		Share Forfeiture A/c	Dr.		250
		To Capital Reserve A/c				250
		(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

 

Working Notes-

 

Share Forfeiture Credit (at the time of forfeiture of shares)	750
Less: Share Forfeiture Debit (at the time of re-issue shares)	500
Balance in Share Forfeiture after re-issue of shares	250

Capital Reserve = Balance in Share Forfeiture of re-issued shares =  ` 250

 

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Chapter-9: Company Accounting-Share Capital  | 2022-2023

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