Question:
PR Ltd. forfeited 10,000 equity shares of ₹10 each, issued at a premium of ₹4 per share, for non-payment of the first call of ₹3 per share. The second and final call of ₹2 per share had not yet been made.
These forfeited shares were later reissued at a discount of ₹1 per share, fully paid-up.
Pass necessary journal entries for the forfeiture and reissue of shares in the books of PR Ltd. Also prepare the Share Forfeiture Account.
PR Ltd. forfeited 10,000 equity shares of ₹10 each, issued at a premium of ₹4 per share, for non-payment of the first call of ₹3 per share. The second and final call of ₹2 per share had not yet been made.
These forfeited shares were later reissued at a discount of ₹1 per share, fully paid-up.
Pass necessary journal entries for the forfeiture and reissue of shares in the books of PR Ltd. Also prepare the Share Forfeiture Account.
Show Hint
In case of forfeiture with unpaid premium, reverse the premium as well. For reissue at discount, adjust it against Share Forfeiture Account.
Updated On: Jul 19, 2025
Hide Solution
Verified By Collegedunia
Solution and Explanation
Step 1: Analyze the share structure
Face value of share = ₹10
Securities premium = ₹4
Total issue price = ₹14
Money received till forfeiture:
Application and Allotment including premium = ₹6 (face value) + ₹4 (premium) = ₹10
First call of ₹3 was unpaid
Second call of ₹2 was not yet made
Called-up capital at time of forfeiture = ₹8 (₹6 + ₹2 first call)
Amount unpaid = ₹3 (first call)
Amount received = ₹6 (face value) + ₹4 (premium) = ₹10
Face value of share = ₹10
Securities premium = ₹4
Total issue price = ₹14
Money received till forfeiture:
Application and Allotment including premium = ₹6 (face value) + ₹4 (premium) = ₹10
First call of ₹3 was unpaid
Second call of ₹2 was not yet made
Called-up capital at time of forfeiture = ₹8 (₹6 + ₹2 first call)
Amount unpaid = ₹3 (first call)
Amount received = ₹6 (face value) + ₹4 (premium) = ₹10
Step 2: Forfeiture Entry for 10,000 shares
₹8 called up × 10,000 shares = ₹80,000
₹3 unpaid (first call) × 10,000 = ₹30,000
Amount received = ₹6 per share × 10,000 = ₹60,000
Securities Premium was already received and hence not reversed.
Share Capital A/c Dr. ₹80,000 To Share Forfeiture A/c ₹70,000 To Share First Call A/c ₹30,000Explanation:
₹8 called up × 10,000 shares = ₹80,000
₹3 unpaid (first call) × 10,000 = ₹30,000
Amount received = ₹6 per share × 10,000 = ₹60,000
Securities Premium was already received and hence not reversed.
Step 3: Reissue Entry (at a discount of ₹1 per share)
Face value = ₹10, premium ₹4, so reissued at ₹13 → discount of ₹1/share → ₹10,000 discount adjusted from Share Forfeiture A/c.
Bank A/c Dr. ₹1,30,000 Share Forfeiture A/c Dr. ₹10,000 To Share Capital A/c ₹1,40,000Shares reissued at ₹13 per share, fully paid-up.
Face value = ₹10, premium ₹4, so reissued at ₹13 → discount of ₹1/share → ₹10,000 discount adjusted from Share Forfeiture A/c.
Step 4: Transfer balance in Share Forfeiture A/c to Capital Reserve
Share Forfeiture A/c Dr. ₹60,000 To Capital Reserve A/c ₹60,000
Share Forfeiture Account
Dr. SHARE FORFEITURE ACCOUNT Cr. -------------------------------------------------------------------- Particulars ₹ Amount Particulars ₹ Amount -------------------------------------------------------------------- To Discount on Reissue ₹10,000 By Forfeiture of Shares ₹70,000 To Capital Reserve ₹60,000 -------------------------------------------------------------------- Total ₹70,000 Total ₹70,000
Was this answer helpful?
0
0
Top Questions on Accounting for Share Capital
- Altima Ltd. invited applications for 2,00,000 equity shares of ₹ 10 at a premium of ₹ 4 per share. Amount payable:
On application and allotment – ₹ 7 (incl. ₹ 1 premium)
On first and final call – Balance.
Applications received for 2,40,000 shares. 30,000 rejected. Manvi allotted 4,000 shares failed to pay first and final call. Her shares were forfeited. These were reissued at ₹ 4 per share fully paid-up.
Pass journal entries in the books of Altima Ltd.- CBSE CLASS XII - 2025
- Accountancy
- Accounting for Share Capital
- Radhika Ltd. invited applications for issuing 40,000 equity shares of ₹ 100 each at a premium of ₹ 50 per share. The amount was payable as follows:
On Application and Allotment – ₹ 40 per share (including ₹ 10 premium)
On First call – ₹ 45 per share (including ₹ 5 premium)
On Second and final call – Balance
Applications for 39,000 shares were received. Allotment was made in full to all the applicants. Dinu, to whom 100 shares were allotted, failed to pay the first call money. His shares were immediately forfeited. The forfeited shares were re-issued thereafter at ₹ 70 per share fully paid up. The second and final call was not yet made. Pass necessary journal entries for the above transactions in the books of Radhika Ltd.- CBSE CLASS XII - 2025
- Accountancy
- Accounting for Share Capital
- VL Ltd. offered for public subscription 90,000 equity shares of ₹ 10 each at a premium of 10%. The entire amount was payable on application. Applications were received for 1,00,000 shares and allotment was made to all the applicants on pro-rata basis. The amount received on application was___.
- CBSE CLASS XII - 2025
- Accountancy
- Accounting for Share Capital
- Centurian Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 20 per share. The amount was payable as follows: On Application and Allotment – ₹ 20 per share (including premium ₹ 17 per share)
On First and Final call – ₹ 10 per share (including premium ₹ 3 per share)
Applications were received for 3,00,000 equity shares and allotment was made to the applicants as follows: (i) Applicants for 2,00,000 shares were allotted 1,50,000 shares.
(ii) Applicants for 1,00,000 shares were allotted 50,000 shares.
Excess money received on application and allotment was adjusted towards sums due on first and final call. Deepali, who had applied for 2,000 shares, failed to pay the first and final call money. Her shares were subsequently forfeited. Deepali belonged to Category (i).
Pass necessary journal entries for the above transactions in the Books of Centurian Ltd.
Open Calls-in-Arrears and Calls-in-Advance account, wherever necessary.- CBSE CLASS XII - 2025
- Accountancy
- Accounting for Share Capital
- Sona Ltd. invited applications for issuing 60,000 equity shares of ₹ 50 each. The amount was payable as follows:
On Application – ₹ 20 per share
On Allotment – ₹ 25 per share
On First and final call – Balance
Applications for 90,000 shares were received. Applications for 10,000 shares were rejected and application money refunded. Shares were allotted on pro-rata basis to the remaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Rahul, to whom 600 shares were allotted, failed to pay the allotment money and his shares were forfeited immediately. Afterwards, the first and final call was made. Mona, to whom 1,000 shares were allotted, failed to pay the first and final call. Her shares were also forfeited. Pass necessary journal entries in the books of Sona Ltd. for the above transactions.- CBSE CLASS XII - 2025
- Accountancy
- Accounting for Share Capital
View More Questions
Questions Asked in CBSE CLASS XII exam
- If $y = a \cos(\log x) + b \sin(\log x)$, then $x^2y'' + xy'1$ is:
- CBSE CLASS XII - 2025
- Continuity and differentiability
A ladder of fixed length \( h \) is to be placed along the wall such that it is free to move along the height of the wall.
Based upon the above information, answer the following questions:(iii) (b) If the foot of the ladder, whose length is 5 m, is being pulled towards the wall such that the rate of decrease of distance \( y \) is \( 2 \, \text{m/s} \), then at what rate is the height on the wall \( x \) increasing when the foot of the ladder is 3 m away from the wall?
- CBSE CLASS XII - 2025
- Application of derivatives
- A meeting will be held only if all three members A, B and C are present. The probability that member A does not turn up is 0.10, member B does not turn up is 0.20 and member C does not turn up is 0.05. The probability of the meeting being cancelled is:
- CBSE CLASS XII - 2025
- Probability
- Vishesh, Manik and Amit were partners in the ratio 5 : 4 : 1. Amit retired on 31st March, 2024. Vishesh and Manik decided to share Amit’s share in the ratio 2 : 3. What will be the new profit sharing ratio between Vishesh and Manik?
- CBSE CLASS XII - 2025
- Retirement and Death of a Partner
- The electric field in a region is given by \( \vec{E} = 40x \hat{i} \, \text{N/C}. \) Find the amount of work done in taking a unit positive charge from a point (0, 3m) to the point (5m, 0).
- CBSE CLASS XII - 2025
- Electrostatics
View More Questions