Question

Jindal ltd. forfeited 80 shares of ₹ 10 each on which the holder had paid only the application

money of `₹3 per share. Out of these, 40 shares were reissued to Mahendra as fully paid for ₹ 9

per share. The amount transferred to Capital Reserve is:​

Answer 1

Answer:

entry 1

share capital A/c DR. 800

to forfeiture share A/C 240

to calls-in_arrears A/C 560

entry 2

Bank A/C DR. 360

forfeiture share A/C DR. 40

to share capital A/C 400

entry 3

forfeiture share A/C DR. 120

to capital reserve AlC 120

Answer 2

Forfeiture Entry

Equity share capital A/c Dr.     800

To Share Forfeiture A/c        240

To Calls-in arrears A/c        560

(Being 800 shares forfeited)

Re-issue Entry

Bank A/c Dr.       360

Share Forfeiture A/c Dr.     40

To share capital A/c         400

(Being 40 shares re-issued at Rs.9 per share fully paid)

Transfer to Reserve Entry

Forfeiture A/c Dr.      80

To Capital Reserve A/c        80

(Being balance in forfeiture a/c for 40 shares transferred to capital reserve a/c)

Note:1

Now the credit balance in the forfeiture account was Rs.240 for 80 shares so the credit balance for 40 shares would have been Rs.120 of which Rs.40 was utilized for loss on re-issue, therefore the amount left to be transferred to Capital Reserve = Rs.120-Rs.40 = Rs.80