Arushi Computers Ltd. issued 10,000 equity shares of Rs. 100 each at 10% premium. The net amount payable as follows:
| Particulars | Amount (₹) |
|---|---|
| On Application | 20 |
| On Allotment (Rs. 40 + premium Rs. 10) | 50 |
| On First Call | 30 |
| On Final Call | 10 |
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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Start your 14-day free trial to unlock the full solution →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.
| Particulars | L.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/c | 9,750 |
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