Give Journal Entries for forfeiture and reissue of forfeited shares in the following cases: (a) X Ltd. forfeited 100 equity shares of ₹ 10 each held by Shree Ram on 15th December,... Give Journal Entries for forfeiture and reissue of forfeited shares in the following cases: (a) X Ltd. forfeited 100 equity shares of ₹ 10 each held by Shree Ram on 15th December, 2019 for non-payment of First Call of ₹ 2 per share. These shares were reissued to Ganga Ram on 25th December, 2019 at a discount of ₹ 3.50 per share. (b) X Ltd. forfeited 200 equity shares of ₹ 10 each, held by Mani Ram on 15th December, 2019 for non-payment of the Final Call of ₹ 3 per share. Out of these 100 equity shares were reissued to Lok Nath on 25th December, 2019 at a discount of ₹ 4 per share. (c) X Ltd. forfeited 150 equity shares of ₹ 10 each, held by Khayli Ram on 15th December, 2019 for non-payment of allotment money of ₹ 8 per share (including Securities Premium ₹ 5 per share), the First Call of ₹ 2 per share and the Final Call of ₹ 3 per share. Out of these 100 equity shares were re-issued to Shree Bhagwan at ₹ 14 per share on 25th December, 2019. (d) A Ltd. company forfeited 100 shares of ₹ 10 each at 20% premium (to be paid at the time of application money) on which allotment money of ₹ 4 and first call of ₹ 3 were not received. The final call of ₹ 2 is not yet called. These shares were originally allotted on pro-rata basis in the ratio of 4 : 5. These shares were subsequently reissued at a discount of ₹ 8 per share credited as ₹ 8 paid up. Read more

Steps to Solve

1. Forfeiting Shares Held by Shree Ram

   First, we need to record the forfeiture of 100 shares of ₹10 each for non-payment of the first call of ₹2 and the final call of ₹3.

   The journal entry will be:

   • Debit: Share Capital Account ₹1000 (100 shares × ₹10)
   • Credit: Calls in Arrear Account ₹200 (100 shares × ₹2)
   • Credit: Final Call Account ₹300 (100 shares × ₹3)

   So, the journal entry is:

   Dr. Calls in Arrear A/C      ₹200
   Dr. Final Call A/C           ₹300
   Cr. Share Capital A/C         ₹1000
   

2. Reissuing Shares to Ganga Ram

   Next, record the reissue of these shares at a discount of ₹3.50, meaning the amount received would be ₹6.50 per share (₹10 - ₹3.50).

   The journal entry will be:

   • Debit: Bank Account ₹650 (100 shares × ₹6.50)
   • Credit: Share Capital Account ₹1000
   • Debit: Discount on Reissue of Shares Account ₹350 (100 shares × ₹3.50)

   So, the journal entry is:

   Dr. Bank A/C                 ₹650
   Dr. Discount on Reissue A/C  ₹350
   Cr. Share Capital A/C        ₹1000
   

3. Forfeiting Shares Held by Mani Ram

   For the second case, we need to forfeit 200 shares of ₹10 each for non-payment of the final call of ₹3, where the shares are issued at a premium of ₹5.

   The journal entry will be:

   • Debit: Share Capital Account ₹2000 (200 shares × ₹10)
   • Credit: Final Call Account ₹600 (200 shares × ₹3)
   • Credit: Share Premium Account ₹1000 (200 shares × ₹5)

   So, the journal entry is:

   Dr. Final Call A/C           ₹600
   Dr. Share Premium A/C        ₹1000
   Cr. Share Capital A/C         ₹2000
   

4. Reissuing Shares to Lok Nath

   Next, record the reissue of 100 shares at a premium of ₹4. The amount received would be ₹14 per share (₹10 + ₹4).

   The journal entry will be:

   • Debit: Bank Account ₹1400 (100 shares × ₹14)
   • Credit: Share Capital Account ₹1000
   • Credit: Share Premium Account ₹400 (100 shares × ₹4)

   So, the journal entry is:

   Dr. Bank A/C                 ₹1400
   Cr. Share Capital A/C        ₹1000
   Cr. Share Premium A/C        ₹400
   

5. Forfeiting Shares Held by Khayil Ram

   Here, we forfeit 150 shares for non-payment of the allotment money of ₹8, and the first and final calls.

   The journal entry will be:

   • Debit: Share Capital Account ₹1500 (150 shares × ₹10)
   • Credit: Allotment Account ₹1200 (150 shares × ₹8)
   • Credit: First Call Account ₹450 (150 shares × ₹3)

   So, the journal entry is:

   Dr. Allotment A/C            ₹1200
   Dr. First Call A/C           ₹450
   Cr. Share Capital A/C         ₹1500
   

6. Reissuing Shares to Shree Bhagwan

   Finally, record the reissue of these 100 shares at ₹14 each.

   The journal entry will be:

   • Debit: Bank Account ₹2100 (150 shares × ₹14)
   • Credit: Share Capital Account ₹1500
   • Credit: Premium Account ₹750 (150 shares × ₹5)

   So, the journal entry is:

   Dr. Bank A/C                 ₹2100
   Cr. Share Capital A/C        ₹1500
   Cr. Share Premium A/C        ₹750
   

7. Forfeiting Shares from A Ltd.

   For the last case, 100 shares of ₹10 each with an allotment money of ₹4 are forfeited.

   The journal entry for forfeiture:

   • Debit: Share Capital Account ₹1000 (100 shares × ₹10)
   • Credit: Calls in Arrear Account ₹400 (100 shares × ₹4)

   So, the journal entry is:

   Dr. Calls in Arrear A/C      ₹400
   Cr. Share Capital A/C         ₹1000