Question:
Premier Ltd. forfeited 600 shares of ₹ 10 each issued at a premium of ₹ 3 per share (payable with allotment) for non-payment of allotment money of ₹ 7 per share including premium. The first and final call of ₹ 3 per share was not yet made. The forfeited shares were reissued at ₹ 13 per share fully paid up.
Premier Ltd. forfeited 600 shares of ₹ 10 each issued at a premium of ₹ 3 per share (payable with allotment) for non-payment of allotment money of ₹ 7 per share including premium. The first and final call of ₹ 3 per share was not yet made. The forfeited shares were reissued at ₹ 13 per share fully paid up.
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Forfeiture entry removes both called-up capital and premium if unpaid. Profit on reissue goes to Capital Reserve.
Updated On: Nov 1, 2025
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Solution and Explanation
1. Share Capital A/c Dr. ₹ 4,200
Securities Premium A/c Dr. ₹ 1,800
To Share Forfeiture A/c ₹ 3,000
To Share Allotment A/c ₹ 3,000
(Being forfeiture of 600 shares for non-payment of allotment)
2. Bank A/c Dr. ₹ 7,800
To Share Capital A/c ₹ 6,000
To Securities Premium A/c ₹ 1,800
(Being reissue of 600 shares at ₹ 13 fully paid up)
3. Share Forfeiture A/c Dr. ₹ 300
To Capital Reserve A/c ₹ 300
(Being profit on reissue transferred to Capital Reserve)
Calculation of profit on reissue:
Total received on reissue = ₹ 7,800
Less Face value = ₹ 6,000 + premium ₹ 1,800 = ₹ 7,800
No gain/loss, so surplus from forfeiture ₹ 300 transferred.
Securities Premium A/c Dr. ₹ 1,800
To Share Forfeiture A/c ₹ 3,000
To Share Allotment A/c ₹ 3,000
(Being forfeiture of 600 shares for non-payment of allotment)
2. Bank A/c Dr. ₹ 7,800
To Share Capital A/c ₹ 6,000
To Securities Premium A/c ₹ 1,800
(Being reissue of 600 shares at ₹ 13 fully paid up)
3. Share Forfeiture A/c Dr. ₹ 300
To Capital Reserve A/c ₹ 300
(Being profit on reissue transferred to Capital Reserve)
Calculation of profit on reissue:
Total received on reissue = ₹ 7,800
Less Face value = ₹ 6,000 + premium ₹ 1,800 = ₹ 7,800
No gain/loss, so surplus from forfeiture ₹ 300 transferred.
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