Q.A Ltd. forfeited 500 equity shares of ₹10 each, fully called-up, for non-payment of the allotment money of ₹3 per share and the first and final call money of ₹4 per share (the application money of ₹3 per share had already been received). These shares were later reissued as fully paid at ₹8 per share. Pass journal entries for the forfeiture, the reissue, and the transfer of any remaining balance in the Share Forfeited Account.

The forfeiture entry removes the called-up capital and unpaid instalments and credits only what was genuinely received; the reissue then brings in a new shareholder at a discount funded from that retained amount.

Step 1 — Forfeiture entry.

Called-up amount per share = ₹10 (application 3 + allotment 3 + call 4). For 500 shares, called-up = 500 × 10 = ₹5,000.

Unpaid amounts: Allotment 500 × 3 = ₹1,500; Call 500 × 4 = ₹2,000. Total unpaid = ₹3,500.

Amount already received (application only) = 500 × 3 = ₹1,500.

Step 2 — Reissue at ₹8 per share, as fully paid ₹10 shares.

Amount received on reissue = 500 × 8 = ₹4,000. Discount allowed = 500 × (10 − 8) = ₹1,000 — well within the ₹1,500 already forfeited, so it is permissible.

Step 3 — Transfer the remaining balance in Share Forfeited A/c to Capital Reserve. …

As a running check, the Share Forfeited Account for these 500 shares should always tie out: ₹1,500 credited on forfeiture, less ₹1,000 debited as the discount on reissue, leaves exactly ₹500 to transfer to Capital …

A frequent mistake is transferring the ENTIRE Share Forfeited balance (₹1,500) to Capital Reserve without first deducting the discount actually allowed on reissue (₹1,000) — only the balance remaining AFTER accounting for the r …