Question

Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
(i) Macil Ltd. forfeited 3,000 shares of ₹ 100 each issued at 20% premium for non-payment of allotment ₹ 30/share and 1st call ₹ 40/share (incl. premium ₹ 10). 2nd and final call of ₹ 30 not yet called. Out of these, 2,000 were reissued at ₹ 80 each fully paid up for ₹ 90/share.
(ii) Avian Ltd. forfeited 10,000 shares of ₹ 10 each. First call of ₹ 4 not received, second and final call of ₹ 1 not yet called. 4,000 shares reissued to Ajay at ₹ 9 fully paid.

Hint:

In share forfeiture, remove capital and unpaid amount; credit only the actual amount received to Share Forfeiture A/c. When shares are reissued, debit the Bank and any balance from Forfeiture A/c.

Answer 1

(i) Macil Ltd.

1. Forfeiture of 3,000 Shares:
Application money received = ₹30
Allotment not received = ₹30
First Call not received = ₹40 (includes ₹10 premium)

\[ \text{Share Capital A/c Dr.} \quad ₹70,000 \quad (₹30 + ₹40) \times 3,000 \\ \text{Securities Premium A/c Dr.} \quad ₹10,000 \quad (₹10 \times 3,000) \\ \text{To Share Forfeiture A/c} \quad ₹30,000 \quad (\text{amount received}) \\ \text{To Share Allotment A/c} \quad ₹50,000 \\ \text{To Share First Call A/c} \quad ₹40,000 \]

2. Reissue of 2,000 Shares at ₹90 (Face ₹100):

\[ \text{Bank A/c Dr.} \quad ₹1,80,000 \\ \text{Share Forfeiture A/c Dr.} \quad ₹20,000 \\ \text{To Share Capital A/c} \quad ₹2,00,000 \]

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(ii) Avian Ltd.

1. Forfeiture of 10,000 Shares:
Application + Allotment received = ₹5
First Call unpaid = ₹4
Final Call not made yet = ₹1

\[ \text{Share Capital A/c Dr.} \quad ₹90,000 \quad (₹9 \times 10,000) \\ \text{To Calls in Arrears A/c} \quad ₹40,000 \quad (\text{First Call}) \\ \text{To Share Forfeiture A/c} \quad ₹50,000 \quad (₹5 × 10,000) \]

2. Reissue of 4,000 Shares at ₹9 fully paid:

\[ \text{Bank A/c Dr.} \quad ₹36,000 \\ \text{Share Forfeiture A/c Dr.} \quad ₹36,000 \\ \text{To Share Capital A/c} \quad ₹72,000 \]