Question

Pass journal entries in the following cases:
M Ltd. forfeited 200 Equity Shares of ₹10 each issued at a premium of ₹ 5 per share, held by Ram for non-payment of the final call of ₹ 3 per share. Of these, 100 shares were reissued to Vishu at a discount of ₹ 4 per share.

Answer 1

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share. Of these, 100 shares were reissued to Vishu at a discount of ₹ 4 per share

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Answer 2

Answer:

Explanation:

Working notes

total amount called of shares forfeited

⇒ 200 * 10 = 2000

amount  of final call not paid on 200 shares

200 * 3 = 600

Amount forfeited

Total amount called - amount not paid

⇒ 2000 - 600 = 1400

Amount of shares reissued

Total amount on reissue - discount on reissue

⇒ 100 * 10 = 1000

⇒ 1000 - 400

⇒ 600

amount transferred to capital reserve

Total amount forfeited on 200 shares = 1400

Amount forfeited against 100 shares reissued 1400/2

⇒ 700

discount on shares reissued 400

Amt of forfeiture account transferred to capital reserve

⇒ 700 - 400

⇒ 300

Journal entries

Equity shares capital A/c                           Dr      2000

       To share forfeiture A/c                                                  1400

        To calls in arrears A/c                                                    600

(being 200 shares forfeited for

non payment of Rs. 3 on final call)

Bank A/c                                                  Dr         600    

Share forfeiture A/c                                Dr          400

     to Equity share capital A/c                                               1000

(being 100 shares of 10 each

reissued at 6 as fully paid up)

Shares forfeiture A/c                  Dr                            300

    to  Capital reserve A/c                                                         300

(being balance in share forfeiture

of 100 share reissued transferred to capital reserve)