Volume-2 | Chapter-1 | Question 51 to 55 | Issue of Share Capital | Ts grewal solution 2020-21 | Class-12th

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 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



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

( `​)

Credit

Amount

( `​)

 

 

 

 

 

 

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

( `​)

Credit

Amount

( `​)

 

 

 

 

 

 

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

( `​)

Credit

Amount

( `​)

 

 

 

 

 

 

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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