Volume-2 | Chapter-1 | Question 56 to 60 | Issue of Share Capital | Ts grewal solution 2020-21 | Class-12th

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

 

Calculation of Capital Reserve

Total Share Forfeiture (at the time of cancellation of shares) =  ` 950

Less: Total Share Forfeiture (at the time of re-issue of shares) =  ` (200)

Capital Reserve                                                                    =  ` 750

 


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