Question

A company issued 500 shares of 10 each at 12 to X; 3 payable on application, 4 on allotment and the balance on first and final call (including premium). X failed to pay the amount due on first and final call and his shares were forfeited and subsequently re-issued at 8 per share fully paid. Make Journal entries for the forfeiture and re-issue of shares. ​

Answer 1

Answer:

Journal entry

Share capital account dr 5000

Security premium reserve dr 1000

To share first & final call 2500

To share forfeiture a/c. .... 3500

( 500 share of X forfeited)

Bank account dr 4000

Share forfeiture a/c dr 1000

...To share capital account. 5000

( share reissue for rs 8 as fully paid up)

Share forfeiture a/c. dr 2500

To Capital reserve. 2500

( profit transferred to Capital reserve )