Question

20. A limited company forfeited 600 shares of 100 each (originally issued at 25% premium
which was payable along with application money) on which allotment money of 20 and
first call money of 30 were not received; the final call money of 30 is not yet called.
These shares were originally allotted on pro-rata basis in the ratio of 4 : 3. These shares
were subsequently reissued at a discount of 5 per share, credited as 70 paid up.
Pass necessary Journal entries for forfeiture and reissue of shares.​

Answer 1

Lets solve for share capital

Explanation:

Share capital a/c              dr       42000

        To share allotment a/c                        3000

         To share first call a/c                           18000

         To share forfeiture a/c                        21000

(Being 600 shares were forfeited)

Bank a/c                         dr          39000

share forfeiture a/c       dr            3000

          To share capital a/c                             42000

(Being forfeited shares were reissued at 70 paid up)

share forfeiture a/c      dr          18000

             To capital reserve a/c                         18000

(being balance of forfeiture a/c is transferred to capital a/c)