Question

A holds 100 shares of Rs. 10 each, on which he has paid only Rs. 2.50 per share as application money.
B, who holds 200 shares of Rs. 10 each, has paid Rs. 2.50 and Rs. 2 per share as application and allotment money, respectively.
C holds 300 shares of Rs. 10 each and has paid Rs. 2.50 per share on application, Rs. 2 per share on allotment and Rs. 3 per share on first call.
They failed to pay their arrears and the final call. Therefore the Directors forfeited their shares.
These shares were subsequrntly reissued for cash at a discount of 10 per cent.
Record journal entries in the books of the company to give effect to the above.

Answer 1

Answer:

Particulars Amt Amt

1) Share Capital A/c (600 x 8 ) Dr 4800

To share allotment a/c ( 100 x 2 ) 200

To share first call a/c ( 300 x 3) 900

To share second call a/c (600 x 2) 1200

To share forfeiture a/c (600 + 1000 + 900) 2500

( Being 600 share @ Rs. 10 per share Rs. 8 called up

forfeited after making second call)

2) Bank a/c Dr 6600

To sh.capital a/c 6000

To securities a/c 600

( Being 600 share @ Rs. 10 each Rs. 11 per share

fully paid up reissued)

3) share forfeited a/c Dr 2500

To capital reserve a/c 2500

(Being balance of share forfeited account

transferred to capital reserve a/c after reissue)

Working note: -

TOTAL MONEY CALLED-UP RS.

Application 1

Allotment 2

First call 3

Second call 2

Total = 8