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 use the forfeiture amount to offset the loss. Any remaining forfeiture balance is transferred to Capital Reserve.

Answer 1

Journal Entries: \begin{center} \begin{tabular}{|l|l|l|l|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
1st May, 2023 & Share Capital A/c & 50,000 & --
& To Share Forfeiture A/c & -- & 27,500
& To Calls in Arrears A/c & -- & 22,500
& \textit{(500 shares forfeited for non-payment of \rupee 45 per share)} & &
1st May, 2023 & Bank A/c & 12,500 & --
& Share Forfeiture A/c & 12,500 & --
& To Share Capital A/c & -- & 25,000
& \textit{(250 forfeited shares reissued at \rupee 50 each fully paid)} & &
1st May, 2023 & Share Forfeiture A/c & 15,000 & --
& To Capital Reserve A/c & -- & 15,000
& \textit{(Balance in forfeiture account transferred to capital reserve)} & &
\end{tabular} \end{center}