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Numerical Questions · Q13
Q.

Arushi Computers Ltd. issued 10,000 equity shares of Rs. 100 each at 10% premium. The net amount payable as follows:

ParticularsAmount (₹)
On Application20
On Allotment (Rs. 40 + premium Rs. 10)50
On First Call30
On Final Call10

A shareholder holding 200 shares did not pay final call. His shares were forfeited. Out of these 150 shares were reissued to Ms. Sonia at Rs. 75 per share. Give journal entries in the books of the company.

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200 shares are forfeited for non-payment of the final call, and 150 of them are reissued to Ms. Sonia at ₹75 per share. The profit on the reissued shares transferred to Capital Reserve is ₹9,750; ₹4,500 (relating to the 50 shares not yet reissued) remains in the Share Forfeiture Account.

Amounts received on the forfeited shares

The shareholder paid application (₹20), allotment (₹50, of which ₹10 was premium) and the first call (₹30), failing only the final call of ₹10. The amount received towards share capital (face value) is therefore ₹20 + ₹40 + ₹30 = ₹90 per share; the ₹10 premium was already received and stays in Securities Premium Reserve (it is not touched on forfeiture).

Journal Entries in the Books of Arushi Computers Ltd.

ParticularsL.F.Debit (₹)Credit (₹)
Forfeiture of 200 shares (final call unpaid)
Share Capital A/c (200 x ₹100) Dr.20,000
  To Share Forfeiture A/c (200 x ₹90)18,000
  To Calls-in-Arrears A/c (200 x ₹10)2,000
(200 shares forfeited for non-payment of the final call)
Reissue of 150 shares to Ms. Sonia at ₹75, fully paid
Bank A/c (150 x ₹75) Dr.11,250
Share Forfeiture A/c (150 x ₹25) Dr.3,750
  To Share Capital A/c (150 x ₹100)15,000
(150 forfeited shares reissued as fully paid at ₹75 per share)
Transfer of profit on reissued shares to Capital Reserve
Share Forfeiture A/c Dr.9,750
  To Capital Reserve A/c9,750

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