Question

Z Ltd. Forfeited 400 shares of Rs 10 each fully called up, held by Prashant, issued at a premium of Rs 2 per share. Prashant Paid Rs 3 on application. He could not pay Rs 5 (including premium) on allotment, Rs 2.5 on first call and Rs 1.5 final call. These shares were re-issued to Shri Mukesh for Rs 9 per shares. Given the journal entries for forfeiture and re-issue of shares.

Answer 1

In the Books of Z Ltd. Journal Entries
DATE	Particulars		L.F.	Dr. Amount	Cr. Amount
				Rs.	Rs.
	Share Capital A/c (400 x Rs. 10)	Dr.....		4,000
	Securities Premium A/c (400 x Rs. 2)	Dr....		800
	To Share Allotment A/c (400 x Rs. 5)				2,000
	To Share First Call A/c (400 x Rs. 2.5)				1,000
	To Share Final Call A/c (400 x Rs. 1.5)				600
	To Share Forfeiture A/c (400 × Rs. 3)				1,200
	(Being forfeiture of 400 shares for non-payment of allotment and call money).
	Bank A/c (400x Rs. 9) Share Forfeiture A/c	Dr...		3600 400	4000
	(400 x Rs. 1) To Share Capital A/c
	(Being re-issue of 400 forfeited shares @ Rs. 9 each)
	Share Forfeited A/c (Rs. 1,200-400)	Dr...		800
	To Capital Reserve A/c (Being profit re-issue of forefeited share transferred to Capital Reserve)				800