Page No 8.119:

Question 56:

Record the journal entries for forfeiture and reissue of shares in the following cases:
(i) Basak Ltd. forfeited 20 shares of ` 10 each, ` 7 called-up on which the shareholder had paid application and allotment money of ` 5 per share. Out of these, 15 shares were reissued to Naresh as ` 7 per share paid-up for ` 8 per share.
(ii) Y Ltd. forfeited 90 shares of ` 10 each, ` 8 called-up issued at a premium of ` 2 per share to 'R' for non-payment of allotment money of ` 5 per share (including premium). Out of these, 80 shares were reissued to Sanjay as ` 8 called-up for ` 10 per share.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
(i)	Share Capital A/c (20 Shares × 7)	Dr.		140
	To Share Forfeiture A/c (20 Shares × 5)				100
	To Calls-in- Arrears A/c (20 Shares × 2)				40
	(20 Shares of ` 10 each, ` 7 called-up forfeited for the non-payment of call)

	Bank A/c (15 Shares × 8)	Dr.		120
	To Share Capital A/c (15 Shares × 7)				105
	To Securities Premium A/c (15 Shares × 1)				15
	(15 shares were reissued as ` 7 paid-up for ` 8 per share)

	Shares Forfeiture A/c (15 Shares × 5)	Dr.		75
	To Capital Reserve A/c				75
	(Transfer of profit on re-issue of 15 shares)

(ii)	Share Capital A/c (90 Shares × 8)	Dr.		720
	Securities Premium A/c (90 Shares × 2)	Dr.		180
	To Share Forfeiture A/c (90 Shares × 5)				450
	To Share Allotment A/c (90 Shares × 5)				450
	(Shares forfeited for non-payment of allotment)
	Bank A/c (80 Shares × 10)	Dr.		800
	To Share Capital A/c (80 Shares × 8)				640
	To Securities Premium A/c (80 Shares × 2)				160
	(80 shares were reissued for ` 10, ` 8 called-up)

	Shares Forfeiture A/c (80 Shares × 5)	Dr.		400
	To Capital Reserve A/c				400
	(Transfer of profit on re-issue of 80 shares)

Working Notes-

Note 1
Profit on 20 forfeited shares=100

Profit on 15 forfeited shares=100×15/20=75

forfeited shares(Cr.)=75 `.(Cr.)

forfeited shares(Dr.)=Nil

Capital reserve=75 `.

Note 2
Profit on 90 forfeited shares=450

Profit on 80 forfeited shares=450×80/90=400

forfeited shares(Cr.)=400 `.(Cr.)

forfeited shares(Dr.)=Nil

Capital reserve=400 `.

Page No 8.119:

Question 57:

Answer:

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
(i)	Bank A/c (1,00,000 × 1)	Dr.		1,00,000
	To Equity share application A/c				1,00,000
	(Being Application money received)

	Equity share application A/c	Dr.		1,00,000
	To Equity Share Capital A/c				1,00,000
	(Being share application money transferred to share Capital)
	Equity share allotment A/c	Dr.		2,00,000
	To Equity Share Capital A/c				2,00,000
	(Being allotment due)

	Bank A/c (2,00,000-2,000)			1,98,000
	To Equity share allotment A/c				1,98,000
	(Being allotment money received)

	Equity Share Capital A/c
	To Equity share allotment A/c
	To Equity share forfeiture A/c
	(Being 1000 share of Ramesh forfeited due to non- payment of allotment)

	Equity share First and final Call A/c	Dr.		2,97,000
	To Equity Share Capital A/c (99,000×3)				2,97,000
	(Being allotment due)

	Bank A/c (98,500×3)			2,95,500
	To Equity share allotment A/c				2,95,500
	(Being allotment money received except 500 shares of Suresh)

	Equity Share Capital A/c (500×6)			3,000
	To Equity share first call A/c (500×3)				1,500
	To Equity share forfeiture A/c (500×3)				1,500
	(Being 1000 share of Suresh forfeited due to non- payment of first Call)

	Bank A/c (1,000+500×9)			13,500
	Equity share forfeiture A/c (1500×1)			1,500
	To Equity Share Capital A/c				15,000
	(Being forfeited shares re-issue of Ramesh of 1000 and Suresh 500 and re-issued at 9 fully paid-up)

	Equity share forfeiture A/c (1,000+1,500-1,500)			1,000
	To capital Reserve A/c				1,000
	(Being amount transferred to capital reserve)

	Equity Share Second and final call A/c			3,94,000
	To Equity Share Capital A/c (98,500×4)				3,94,000
	(Being final Call due)

	Bank A/c			3,94,000
	To Equity Share Second and final call A/c				3,94,000
	(Being final call money received)

Page No 8.119:

Question 58:

A holds 100 shares of ` 10 each on which he has paid ` 1 per share on application.
B holds 200 shares of ` 10 each on which he has paid ` 1 and ` 2 per share on application and allotment respectively.
C holds 300 shares of ` 10 each and has paid ` 1 on application, ` 2 on allotment and ` 3 on first call. They all fail to pay their arrears and the second call of ` 2 per share . Shares are forfeited and subsequently reissued @ ` 11 per share as fully paid-up.
journalise the above.

Answer:

Application	`	1
Allotment	`	2
First Call	`	3
Second Call	`	2
	`	8	Called-up

Journal Entries
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Forfeiture of Shares
	Shares of A
	Share Capital A/c	Dr.		800
	To Share Forfeiture A/c				100
	To Calls-In-Arrears A/c				700
	(100 shares of ` 10 each, ` 8 called-up, held by A forfeited for the non-payment of ` 7 per share)

	Shares of B
	Share Capital A/c	Dr.		1,600
	To Share Forfeiture A/c				600
	To Calls-in-Arrears A/c				1,000
	(200 shares of ` 10 each, ` 8 called-up, held by B forfeited for non-payment of ` 5 per share)

	Shares of C
	Share Capital A/c	Dr.		2,400
	To Share Forfeiture A/c				1,800
	To Calls-in-Arrears A/c				600
	(300 shares of ` 10 each, ` 8 called-up held by C forfeited for the non-payment of ` 2 per share)
	Re-issue of shares

	Bank A/c	Dr.		6,600
	To Share Capital A/c				6,000
	To Securities Premium A/c				600
	(600 shares of ` 10 each re-issued at ` 11 per share fully paid-up)

	Share Forfeiture A/c	Dr.		2,500
	To Capital Reserve A/c				2,500
	(Share Forfeiture transferred to Capital Reserve)

Working Note:

Share Forfeiture of 100 shares held by A	`	100	Cr.
Share Forfeiture of 200 shares held by B	`	600	Cr.
Share Forfeiture of 300 shares held by C	`	1,800	Cr.
Total Share Forfeiture credit (at the time of cancellation of shares)	`	2,500

Calculation of Capital Reserve

Total Share Forfeiture (at the time of cancellation of shares) = ` 2,500 Cr.

Less: Total Share Forfeiture (at the time of re-issue of shares) = (NIL) Dr.

Capital Reserve = ` 2,500

Page No 8.119:

Question 59:

Software Ltd. company with registered capital of ` 5,00,000 in shares of ` 10 each issued 20,000 of such shares payable ` 2 on application, ` 4 on allotment, ` 2 on first call ` 2 on final call. All the money payable on allotment was duly received but on the first call being made, one shareholder paid the entire balance on his holding of 300 shares and five shareholders with a total holding of 1,000 shares failed to pay their dues on the first call. These shares were forfeited for non-payment of first call money. Final call was made and all the money due was received. Later on, forfeited shares were reissued @ ` 6 per share as fully paid-up.
Record the above in the company's Journal and prepare the Balance Sheet.

Answer:

Amount payable as

Application	`	2
Allotment	`	4
First Call	`	2
Final Call	`	2
		10

Books of Software Ltd. Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)

	Bank A/c	Dr.		40,000
	To Share Application A/c				40,000
	(Share application money received for 20,000 shares at ` 2 each)

	Share Application A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(Share application money of 20,000 shares at ` 2 each transferred to Share Capital)

	Share Allotment A/c	Dr.		80,000
	To Share Capital A/c				80,000
	(Share allotment due on 20,000 shares at ` 4 each)

	Bank A/c	Dr.		80,000
	To Share Allotment A/c				80,000
	(Share allotment money received)

	Share First Call A/c	Dr.		40,000
	To Share Capital A/c				40,000
	(Share first call due on 20,000 shares at ` 2 each)

	Bank A/c	Dr.		38,600
	Call-in-Arrears A/c (1,000×2)	Dr.		2,000
	To Share First Call A/c				40,000
	To Calls-in-Advance (300×2)				600
	(Share first call of ` 2 per share received on 19,000 shares along with calls-in-advance of 300 shares at ` 2 each and holders of 1,000 shares failed to pay the first call)

	Share Capital A/c	Dr.		8,000
	To Share Forfeiture A/c (1,000×6)				6,000
	To Calls-In-Arrears A/c				2,000
	(1,000 shares of ` 10 each on which ` 8 had called, forfeited for non-payment of first call ` 2 per share)

	Share Final Call A/c	Dr.		38,000
	To Share Capital A/c				38,000
	(Share final call due on 19,000 shares at ` 2 each)

	Bank A/c	Dr.		37,400
	Calls-In-Advance A/c	Dr.		600
	To Share Final Call A/c				38,000
	(Share final call received from 18,700 shares and calls-in-advance of 300 shares adjusted)

	Bank A/c	Dr.		6,000
	Share Forfeiture A/c	Dr.		4,000
	To Share Capital A/c				10,000
	(1,000 shares, re-issued at ` 6 per share as fully paid-up)

	Share Forfeiture A/c	Dr.		2,000
	To Capital Reserve A/c				2,000
	(Balance of Share Forfeiture Account after re-issue transferred to Capital Reserve)

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

Software Ltd.
Balance Sheet
Particulars	Note No.	Amount ( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	2,00,000
b. Reserves and Surplus	2	2,000
2. Non-Current Liabilities
3. Current Liabilities
Total		2,02,000

II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	3	2,02,000
Total		2,02,000

NOTES TO ACCOUNTS


Note No.	Particulars	Amount ( `)
1	Share Capital
	Authorised Share Capital
	50,000 shares of ` 10 each	5,00,000
	Issued Share Capital
	20,000 shares of ` 10 each	2,00,000
	Subscribed, Called-up and Paid-up Share Capital
	20,000 shares of ` 10 each	2,00,000

2	Reserves and Surplus
	Capital Reserve	2,000

3	Cash and Cash Equivalents
	Cash at Bank	2,02,000

Working Notes:

Share Forfeiture Credit

(at the time of forfeiture of shares)

6,000

Less: Share Forfeiture Debit

(at the time of re-issue shares)

4,000

Balance in Share Forfeiture Account after re-issue of shares

2,000

Capital Reserve = Balance in Share Forfeiture Account of re-issued shares = ` 2,000

Page No 8.119:

Question 60:

Slow & Steady Ltd. invited applications for 10,000 Equity Shares of ` 10 each for public subscription. The amount of these shares was payable as:
On application ` 1 per share, on allotment ` 2 per share, on first call ` 3 per share and on second and final call ` 4 per share.
All sums payable on application, allotment and calls were duly received with the following exceptions:
(i) A, who held 200 shares, failed to pay the money on allotments and calls.
(ii) B, to whom 150 shares were allotted, failed to pay the money on first call and final call.
(iii) C, who held 50 shares, did not pay the amount of second and final call.
The shares of A, B and C were forfeited and were subsequently reissued for cash as fully paid-up at a discount of 5%.
Pass necessary Journal entries to record these transactions in the books of X Ltd.

Answer:

Issued and Applied 10,000 Shares of ` 10 each

					A		B		C		Paid-up Shares
Application	`	1	(10,000							=	10,000)
Allotment	`	2	(10,000	–	200					=	9,800)
First Call	`	3	(10,000	–	200	–	150			=	9,650)
Second and Final Call	`	4	(10,000	–	200	–	150	–	50	=	9,600)
		10

Books of Slow and Steady Limited Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)

	Bank A/c	Dr.		10,000
	To Equity Share Application A/c				10,000
	(Share application received for 10,000 shares at ` 1 each)

	Equity Share Application A/c	Dr.		10,000
	To Equity Share Capital A/c				10,000
	(Share application money transferred to Share Capital)

	Equity Share Allotment A/c	Dr.		20,000
	To Equity Share Capital A/c				20,000
	(Share allotment due on 10,000 shares at ` 2 each)

	Bank A/c	Dr.		19,600
	Calls-In-Arrears A/c	Dr.		400
	To Equity Share Allotment A/c				20,000
	(Share allotment of ` 2 per share received on 9,800 shares and holder of 200 failed to pay to it)

	Equity Share First Call A/c	Dr.		30,000
	To Equity Share Capital				30,000
	(Share first call due on 10,000 shares at ` 3 each)

	Bank A/c	Dr.		28,950
	Calls-In-Arrears A/c	Dr.		1,050
	To Equity Shares First Call A/c				30,000
	(Share first call received on 9,650 shares and holders of 350 shares failed to pay it)

	Equity Share Final Call A/c	Dr.		40,000
	To Equity Share Capital A/c				40,000
	(Share final call due on 10,000 shares at ` 4 each)

	Bank A/c	Dr.		38,400
	Calls-In-Arrears A/c	Dr.		1,600
	To Equity Share Final Call A/c				40,000
	(Holders of 9,600 shares paid final call and holders of 400 shares failed to pay it)

	Equity Share Capital A/c	Dr.		2,000
	To Share Forfeiture A/c (200 × 1)				200
	To Calls-In-Arrears A/c (200 × 9)				1,800
	(200 shares held by A on which application money ` 1 was received, forfeited)

	Equity Share Capital A/c	Dr.		1,500
	To Share Forfeiture A/c (150 × 3)				450
	To Calls-In-Arrears A/c (150 × 7)				1,050
	(150 shares of ` 10 each held by B forfeited for the non-payment of two calls ` each)

	Equity Share Capital A/c	Dr.		500
	To Share Forfeiture A/c (50 × 6)				300
	To Calls-in-Arrears A/c (50 × 4)				200
	(50 shares of ` 10 each held by C forfeited for the non-payment of final call ` 4 each)

	Bank A/c (400 × 9.5)	Dr.		3,800
	Share Forfeiture A/c (400 × .5)	Dr.		200
	To Equity Share Capital A/c				4,000
	(400 shares of ` 10 each re-issued at ` 9.5 per share as fully paid-up)

	Share Forfeiture A/c	Dr.		750
	To Capital Reserve A/c				750
	(Balance in Share Forfeiture Account after re-issue transferred to Capital Reserve)

Working Note:

Share Forfeiture of 100 shares held by A	`	200	Cr.
Share Forfeiture of 200 shares held by B	`	450	Cr.
Share Forfeiture of 300 shares held by C	`	300	Cr.
Total Share Forfeiture credit (at the time of cancellation of shares)	`	950