Question

Manika Ltd. forfeited 500 shares of \rupee 100 each for non-payment of first call of \rupee 20 per share and second and final call of \rupee 25 per share. 250 of these shares were reissued at \rupee 50 per share fully paid up. Pass the Journal Entries for forfeiture and reissue of shares.

Hint:

Forfeited shares reissued at a discount are adjusted against the Share Forfeiture Account. Remaining forfeiture is transferred to Capital Reserve.

Answer 1

Step 1: Calculate the Amount Forfeited and Discount on Reissue: \[ \text{Forfeited Amount} = 500 \times (\rupee 100 - \rupee 20 - \rupee 25) = \rupee 27,500 \] \[ \text{Reissue Amount} = 250 \times \rupee 50 = \rupee 12,500 \] \[ \text{Discount on Reissue} = 250 \times (\rupee 100 - \rupee 50) = \rupee 12,500 \] Journal Entries: \begin{center} \begin{tabular}{|c|c|c|c|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
2023-03-31 & Share Capital A/c (500 \(\times\) \rupee 100) & 50,000 &
& To Share Forfeiture A/c & & 27,500
& To Calls in Arrears A/c & & 22,500
2023-03-31 & Bank A/c & 12,500 &
& Share Forfeiture A/c & 12,500 &
& To Share Capital A/c & & 25,000
2023-03-31 & Share Forfeiture A/c & 15,000 &
& To Capital Reserve A/c & & 15,000
\end{tabular} \end{center}