Question

Example : MKay Ltd. forfeited 1,000 shares of Rs 10 each for the non-payment of first call of Re 1. The second and final call of Rs 3 was not made. The forfeited shares were reissued as Rs 8 paid-up for Rs 9 per share. Pass the necessary Journal entries. Solution Share Capital A/c (1,000 shares × Rs 7) Dr. 7,000 To Share Forfeiture A/c (1,000 shares × Rs 6) To Share Forfeiture A/c (1,000 shares × Rs 6) 6,000 To Share First Call A/c (1,000 shares × Re 1) To Share First Call A/c (1,000 shares × Re 1) 1,000 (Forfeiture of 1,000 shares for non-payment of first call money) (Forfeiture of 1,000 shares for non-payment of first call money) in the first entry..why is 7 multiplied from 1000 shares??

Answer 1

sh.capital a/c  dr                                      7000                                                              To sh forfeiture a/c                                                               6000                                    To sh first call a/c                                                                 1000                                  It is multiplied by 7 because company called for rs 10/share but he was not able to   pay first call .so the final call has not made .so called up amount is 7 .        (application -3, allotment -3, share first call-1) and after first call shares are forfeited. so share capital is always made on called up amount.