Page No 8.118:

Question 51:

Sunshine Ltd. issued 20,000 shares of ` 100 each payable ` 25 per share on application , ` 25 per share on allotment and the balance in two calls of ` 25 each. The company did not make the final call of ` 25 per share. All the money was duly received with the exception of the amount due on the first call on 400 shares held by Mr. Modi. The Board of Directors forfeited these shares and subsequently reissued them @ ` 75 per share paid-up for a sum of ` 28,000.
Journalise the above transactions and prepare Share Capital Account.

Answer:

Issued and applied capital 20,000 shares of ` 100 each

Payable as:

Application	`	25
Allotment	`	25
First Call	`	25
Called-up	`	75	per share
Final Call	`	25
	`	100	per share

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)

	Bank A/c	Dr.		5,00,000
	To Share Application A/c				5,00,000
	(Share application money received for 20,000 shares at ` 25 each)

	Share Application A/c	Dr.		5,00,000
	To Share Capital A/c				5,00,000
	(Application money transferred to Share Capital Account)

	Share Allotment A/c	Dr.		5,00,000
	To Share Capital A/c				5,00,000
	(Share Allotment due on 20,000 shares at ` 25 each)

	Bank A/c	Dr.		5,00,000
	To Share Allotment A/c				5,00,000
	(Allotment money received)

	Share First Call A/c	Dr.		5,00,000
	To Share Capital A/c				5,00,000
	(Share First Call due on 20,000 shares of ` 25 each)

	Bank A/c	Dr.		4,90,000
	Calls-in-Arrears A/c	Dr.		10,000
	To Share First Call A/c				5,00,000
	(Share First Call ` 25 per share received on 19,600 shares and a holder of 400 shares did not pay it)

	Share Capital A/c	Dr.		30,000
	To Share Forfeiture A/c				20,000
	To Calls-in-Arrears A/c				10,000
	(400 shares of ` 100 each, ` 75 called-up, forfeited for the non-payment of Share First Call ` 25 per share)

	Bank A/c	Dr.		28,000
	Share Forfeiture A/c	Dr.		2,000
	To Share Capital A/c				30,000
	(400 shares of ` 100 each, ` 75 paid-up, reissued for the sum of ` 28,000)

	Share Forfeiture A/c	Dr.		18,000
	To Capital Reserve A/c				18,000
	(Balance in share forfeiture after re-issue, transferred to capital reserve)

Share Capital Account
Dr.			Cr.
Particulars	Amount ( `)	Particulars		Amount ( `)

Share Forfeiture	20,000	Share Application		5,00,000
Calls-in-Arrears	10,000	Share Allotment		5,00,000
		Share First Call		5,00,000
		Bank		28,000
Balance c/d		Share Forfeiture		2,000

	15,30,000			15,30,000

Working Note-

Share Forfeiture Credit	20,000
Less: Share Forfeiture Debit	2,000
Balance in Share Forfeiture Account after re-issue	18,000

Capital Reserve = Balance in Share Forfeiture Account after re-issue

= ` 18,000

Page No 8.118:

Question 52:

The Hindustan Manufacturing Ltd. had a total subscribed capital of ` 10,00,000 in Equity Shares of ` 10 each of which ` 7.50 were called-up. A final call of ` 2.50 was made and all amount paid except two calls of ` 2.50 each in respect of 100 shares held by D . These shares were forfeited and reissued at ` 8 per share .
Pass necessary journal entries (including that of cash) to record the transactions of final call , forfeiture of shares and reissue of forfeited shares . Also, prepare the Balance Sheet of the company.

Answer:

Books of Hindustan Manufacturing Limited
Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `

	Equity Share Final Call A/c	Dr.		2,50,000
	To Equity Share Capital A/c				2,50,000
	(Share Final Call due on 1,00,000 shares at ` 2.5 per share)

	Bank A/c	Dr.		2,49,750
	Calls-in-Arrears A/c	Dr.		250
	To Equity Share Final Call A/c				2,50,000
	(Share Final Call of ` 2.5 per share received from 99,900 shares and 100 shares did not pay it)

	Equity Share Capital A/c	Dr.		1,000
	To Share Forfeiture A/c				500
	To Calls-in-Arrears A/c				500
	(100 shares of ` 10 each forfeited for the non-payment of two calls of ` 2.5 each)

	Bank A/c	Dr.		800
	Share Forfeiture A/c	Dr.		200
	To Equity Share Capital A/c				1,000
	(100 shares of ` 10 each reissued at ` 8 per share, fully paid-up)

	Share Forfeiture A/c	Dr.		300
	To Capital Reserve A/c				300
	(Balance in Share Forfeiture Account after re-issue of shares, transferred to Capital Reserve)

As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Hindustan Manufacturing Ltd.
Balance Sheet
Particulars	Note No.	Amount ( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	10,00,000
b. Reserves and Surplus	2	300
2. Non-Current Liabilities
3. Current Liabilities
Total		10,00,300

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	10,00,300
Total		10,00,300

NOTES TO ACCOUNTS


Note No.	Particulars	Amount ( `)
1	Share Capital
	Authorised Share Capital
	1,00,000 shares of ` 10 each	10,00,000
	Issued Share Capital
	1,00,000 shares of ` 10 each	10,00,000
	Subscribed, Called-up and Paid-up Share Capital
	1,00,000 shares of ` 10 each	10,00,000

2	Reserves and Surplus
	Capital Reserve	300

3	Cash and Cash Equivalents
	Cash at Bank	10,00,300

Working Notes:

Share Forfeiture Credit (100 shares × ` 5 each)	500
Less: Share Forfeiture Debit (100 share × ` 2 each)	200	Loss on re-issue
Balance in Share Forfeiture Account after re-issue	300

Capital Reserve = Balance in Share Forfeiture Account after re-issue = ` 300

Page No 8.118:

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 Amount ( `)	Credit Amount ( `)
	Equity Share Capital A/c (500×90)	Dr.		45,000
	To Equity Share 1^st 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

Page No 8.118:

Question 54:

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 Amount `	Credit Amount `
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 Amount `	Credit Amount `

		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

Page No 8.118:

Question 55:

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

(i) X 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) Y 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 X Limited Journal
Date		Particulars		L.F.	Debit Amount ( `â€‹)	Credit Amount ( `â€‹)

		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 Y Limited Journal
Date	Particulars		L.F.	Debit Amount ( `â€‹)	Credit Amount ( `â€‹)

	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 Amount ( `â€‹)	Credit Amount ( `â€‹)

		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