Question

Rohit Company Limited was registered with the capital of Rs. 5,00,000, which was divisible @ Rs. 10 in 50,000 shares. The company issued 40,000 shares out of them, on which Rs. 2 per share on application, Rs. 2 per share on allotment, Rs. 4 per share on 1st call and Rs. 2 per share on final call were payable. The public purchased all shares and the amounts were received. However, one shareholder who held 500 shares did not pay the amount of final calls. The directors forfeited these shares and reissued them @ Rs. 6 per share.
Pass necessary journal entries in the books of the company.

Hint:

When shares are forfeited and reissued, the forfeited amount is transferred to the Share Forfeiture Account and the difference from reissue is transferred to the Capital Reserve Account.

Answer 1

Journal Entries for Rohit Company Limited

Given Details:

• Registered capital: Rs. 5,00,000 (50,000 shares @ Rs. 10 each)
• Issued shares: 40,000
• Payments: Rs. 2 on application, Rs. 2 on allotment, Rs. 4 on 1st call, Rs. 2 on final call
• One shareholder holding 500 shares did not pay final call
• Shares forfeited and reissued at Rs. 6 each

Pass the necessary journal entries:

1. On Application

\[ \text{Bank A/c}
\text{Dr.}
80,000
\text{To}
\text{Share Application A/c}
80,000 \] (Being the amount received on application for 40,000 shares @ Rs. 2 each)

2. On Allotment

\[ \text{Bank A/c}
\text{Dr.}
80,000
\text{To}
\text{Share Allotment A/c}
80,000 \] (Being the amount received on allotment for 40,000 shares @ Rs. 2 each)

3. On 1st Call

\[ \text{Bank A/c}
\text{Dr.}
1,60,000
\text{To}
\text{Share 1st Call A/c}
1,60,000 \] (Being the amount received on 1st call for 40,000 shares @ Rs. 4 each)

4. On Final Call

\[ \text{Bank A/c}
\text{Dr.}
78,000
\text{To}
\text{Share Final Call A/c}
78,000 \] (Being the amount received on final call for 39,500 shares @ Rs. 2 each)

5. Forfeiture of Shares (500 shares)

\[ \text{Share Capital A/c}
\text{Dr.}
5,000
\text{To}
\text{Share Final Call A/c}
1,000 \] \[ \text{To}
\text{Share 1st Call A/c}
2,000
\text{To}
\text{Share Allotment A/c}
1,000 \] \[ \text{To}
\text{Share Application A/c}
1,000 \] (Being the forfeiture of 500 shares held by the shareholder who did not pay the final call)

6. Reissue of Forfeited Shares (500 shares @ Rs. 6 each)

\[ \text{Bank A/c}
\text{Dr.}
3,000
\text{To}
\text{Share Capital A/c}
5,000 \] \[ \text{To}
\text{Share Forfeiture A/c}
2,000 \] (Being the reissue of 500 forfeited shares @ Rs. 6 each)

These journal entries record the transactions related to the issuance, forfeiture, and reissue of shares.