Forfeiture and Re-issue of Shares Initially Issued at Par
SAQ 1 - A Ltd. issued 10,000 shares of Rs. 10 each, payable Rs. 4 on
application, Rs. 2 allotment and Rs. 4 on first and final call. All shares
were subscribed and allotted all money was duly received except the call money
on 500 shares. These shares were subsequently forfeited and were reissued at
par as fully paid.
(a) Share capital a/c .... Dr. (500×10) 5000
To calls in arrear a/c
(500×4) 2000
To share forfeiture a/c (500×6) 3000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (500×10) 5000
To share capital
a/c 5000
(Being share reissued at par.)
(c) Share forfeiture a/c .... Dr. 3000
To capital reserve
a/c 3000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 2 - X company forfeited 100 shares of Rs. 100 each for non-payment of
final call of Rs.20 per share. These shares were re-issued at Rs. 100 per
share.
(a) Share capital a/c .... Dr. (100×100) 10,000
To calls in arrear
a/c (100×20) 2000
To share forfeiture a/c (100×80) 8000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (100×100) 10,000
To share capital
a/c 10,000
(Being share reissued at par.)
(c) Share forfeiture a/c .... Dr. 8000
To capital reserve
a/c 8000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 3 - Khaptad Ltd. issued 10,000 shares of 100 each at par, payable as Rs.
30 on application, Rs. 50 on allotment and the balance on final call, which
was duly made. All money was duly received except from a shareholder to whom
500 shares were allotted failed to pay the money due on allotment and call.
And his shares were forfeited and forfeited shares were re-issued at Rs. 90
per share as fully paid.
(a) Share capital a/c .... Dr. (500×100) 50,000
To calls in arrear
a/c (500×70) 35,000
To share forfeiture a/c (500×30) 15,000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (500×90) 45,000
Share forfeiture a/c .... Dr.
(500×10) 5000
To share capital a/c (500×100) 50,000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (500×20) 10,000
To capital reserve
a/c 10,000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 4 - A Co.Ltd. Forfeited 500 shares of Rs. 100 each of a shareholder for
non-payment of final call money of Rs.25 per share. Of the forfeited shares,
400 shares were reissued at Rs. 60 per share as fully paid.
(a) Share capital a/c .... Dr. (500×100) 50,000
To calls in arrear
a/c (500×25) 12,500
To share forfeiture a/c (500×75) 37,500
(Being
share forfeited.)
(b) Bank a/c .... Dr. (400×60) 24,000
Share forfeiture a/c .... Dr.
(400×40) 16,000
To share capital a/c (400×100) 40,000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (400×35) 14,000
To capital reserve
a/c 14,000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 5 - A Ltd. Company forfeited 200 shares of Rs. 10 each for non-payment of
final call money of Rs.3 per share. Out of these forfeited shares, 100 shares
were reissued at Rs. 6 per share as fully paid up.
(a) Share capital a/c .... Dr. (200×10) 2000
To calls in arrear a/c
(200×3) 600
To share forfeiture a/c (200×7) 1400
(Being
share forfeited.)
(b) Bank a/c .... Dr. (100×6) 600
Share forfeiture a/c .... Dr.
(100×4) 400
To share capital a/c (100×10) 1000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (100×3) 300
To capital reserve
a/c 300
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 6 - A Ltd. issued 10,000 shares of Rs. 10 each, payable Rs. 4 on
application, Rs. 2 allotment and Rs. 4 on first and final call. All shares
were subscribed and allotted and all call money was duly received except the
call money on 500 shares. These shares were subsequently forfeited and were
reissued as fully paid for Rs.4,800.
(a) Share capital a/c .... Dr. (500×10) 5000
To calls in arrear a/c
(500×4) 2000
To share forfeiture a/c (500×6) 3000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (500×9.6) 4800
Share forfeiture a/c .... Dr.
(500×0.4) 200
To share capital a/c (500×10) 5000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (500×5.6) 2800
To capital reserve
a/c 2800
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 7 - Himalayan Dairy Ltd. has authorized Capital Rs. 50,00,000 divided into
50,000 shares of Rs. 100 each It invited application for 30,000 shares,
payable as Rs. 20 on application, Rs. 30 on allotment, Rs. 20 on first call
and balance when required.
All application money was received except from a shareholder who had allotted
100 shares failed to pay the allotment and first call money. His shares were
forfeited and re-issued at Rs. 60 per shares, credited as Rs. 70 paid up.
(a) Share capital a/c .... Dr. (100×70) 7000
To calls in arrear a/c
(100×50) 5000
To share forfeiture a/c (100×20) 2000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (100×60) 6000
Share forfeiture a/c .... Dr.
(100×10) 1000
To share capital a/c (100×70) 7000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (100×10) 1000
To capital reserve
a/c 1000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 8 - X Ltd. forfeited 200 shares of Rs. 100 each issued at par due to
non-payment of Rs 30 per share on first call. The final call of Rs.20 per
share was not yet called up. Out of 200 forfeited shares 100 shares were
re-issued at Rs.50 per share the paid up value of which was Rs.80.
(a) Share capital a/c .... Dr. (200×80) 16,000
To calls in arrear
a/c (200×30) 6000
To share forfeiture a/c (200×50) 10,000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (100×50) 5000
Share forfeiture a/c .... Dr.
(100×30) 3000
To share capital a/c (100×80) 8000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (100×20) 2000
To capital reserve
a/c 2000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 9 - M. Ltd. forfeited 400 shares of Rs. 100 each issued at par due to non
payment of Rs 20 per share on first call. The final call of Rs.30 per share
was not yet called up. Out of forfeited shares 300 shares were re-issued at
Rs.70 per share as fully paid up.
(a) Share capital a/c .... Dr. (400×70) 28,000
To calls in arrear
a/c (400×20) 8000
To share forfeiture a/c (400×50) 20,000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (300×70) 21,000
Share forfeiture a/c .... Dr.
(300×30) 9000
To share capital a/c (300×100) 30,000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (300×20) 6000
To capital reserve
a/c 6000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 10 - B.Company Ltd. forfeited 100 shares of Rs. 100 each for non-payment
of final call money of Rs.30 per share. Subsequently these shares were
re-issued at Rs. 110 per share as fully paid up.
(a) Share capital a/c .... Dr. (100×100) 10,000
To calls in arrear
a/c (100×30) 3000
To share forfeiture a/c (100×70) 7000
(Being
share forfeited.)
(b) Bank a/c .... Dr. (100×110) 11,000
To share capital a/c
(100×100) 10,000
To share premium a/c (100×10) 1000
(Being
share reissued at premium.)
(c) Share forfeiture a/c .... Dr. (100×70) 7000
To capital reserve
a/c 7000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 11 - C. company Ltd. forfeited 200 shares of Rs. 10 each for non-payment
of first and final call money Rs.3 per share. Out of these, 150 shares were
re-issued @ Rs. 12 per share as fully paid up.
(a) Share capital a/c .... Dr. (200×10) 2000
To calls in arrear a/c
(200×3) 600
To share forfeiture a/c (200×7) 1400
(Being
share forfeited.)
(b) Bank a/c .... Dr. (150×12) 1800
To share capital a/c
(150×10) 1500
To share premium a/c (150×2) 300
(Being
share reissued at premium.)
(c) Share forfeiture a/c .... Dr. (150×7) 1050
To capital reserve
a/c 1050
(Being share forfeiture amount transferred to capital
reserve.)
Forfeiture and Re-issue of Shares Initially Issued at Premium
SAQ 12 - Khaptad Ltd. issued 10,000 shares of Rs. 100 each at a premium of Rs.
20 per share, payable as Rs.50 (including premium) on application, Rs. 30 on
allotment and balance on first and final call. All money was called up and due
money was received except from Mr. Suresh to whom 250 shares were allotted
failed to pay the allotment and call money and his share were forfeited on the
decision of Board. The forfeited shares were subsequently re-issued at par as
fully paid.
(a) Share capital a/c .... Dr. (250×100) 25,000
To calls in arrear a/c (250×70) 17,500
To share forfeiture a/c (250×30) 7500
(Being share forfeited.)
(b) Bank a/c .... Dr. (250×100) 25,000
To share capital a/c (250×100) 25,000
(Being share reissued at par.)
(c) Share forfeiture a/c .... Dr. (250×30) 7500
To capital reserve a/c 7500
(Being share forfeiture amount transferred to capital reserve.)
SAQ 13 - P.Ltd.forfeited 1,500 shares of Rs. 10 each issued at 10% premium due
to non payment of Rs.2 per share on first call and Rs. 3 per share on final
call. Out of forfeited shares 1,000 shares were re-issued at 5% premium as
fully paid up.
(a) Share capital a/c .... Dr. (1500×10) 15,000
To calls in arrear
a/c (1500×5) 7500
To share forfeiture a/c (1500×5) 7500
(Being
share forfeited.)
(b) Bank a/c .... Dr. (1000×10.5) 10,500
To share capital a/c
(1000×10) 10,000
To share premium a/c (1000×0.5) 500
(Being
share reissued at premium.)
(c) Share forfeiture a/c .... Dr. (1000×5) 5000
To capital reserve
a/c 5000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 14 - B. Ltd. forfeited 600 shares of Rs. 10 each issued at 10% premium for
non-payment of call money of Rs. 4 per share. Out of forfeited shares 400
shares were re-issued at Rs.9 per share as fully paid up.
(a) Share capital a/c .... Dr. (600×10) 6000
To calls in arrear a/c
(600×4) 2400
To share forfeiture a/c (600×6) 3600
(Being
share forfeited.)
(b) Bank a/c .... Dr. (400×9) 3600
Share forfeiture a/c .... Dr.
(400×1) 400
To share capital a/c (400×10) 4000
(Being
share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (400×5) 2000
To capital reserve
a/c 2000
(Being share forfeiture amount transferred to capital
reserve.)
SAQ 15 - Lumbini Sugar Mill Ltd. issued 20,000 shares of 100 each at a premium
of Rs. 20, payable as Rs. 30 on application, Rs. 50 (including premium) on
allotment and the balance on final call, which was duly made. All money was
duly received except from a shareholder to whom 200 shares were allotted
failed to pay the money due on allotment and call. And his shares were
forfeited and forfeited shares were re-issued at Rs. 95 per share as fully
paid.
(a) Share capital a/c .... Dr. (200×100) 20,000
Share premium a/c .... Dr. (200×20) 4000
To calls in arrear a/c (200×90) 18,000
To share forfeiture a/c (200×30) 6000
(Being share forfeited.)
(b) Bank a/c .... Dr. (200×95) 19,000
Share forfeiture a/c .... Dr. (200×5) 1000
To share capital a/c (200×100) 20,000
(Being share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (200×25) 5000
To capital reserve a/c 5000
(Being share forfeiture amount transferred to capital reserve.)
SAQ 16 - X. Ltd. forfeited 250 shares of 10 each issued at a premium of Rs. 5
per share held by Mr. Ram for non-payment of allotment money of Rs. 7 per
share (including Rs. 5 per share premium). The first call of Rs. 2, and final
call of Rs. 3 per share. Out of forfeited shares 100 shares were re-issued to
Mr. Bhagwan at Rs. 13 per share including premium.
(a) Share capital a/c .... Dr. (250×10) 2500
Share premium a/c .... Dr. (250×5) 1250
To calls in arrear a/c (250×12) 3000
To share forfeiture a/c (250×3) 750
(Being share forfeited.)
(b) Bank a/c .... Dr. (100×13) 1300
Share forfeiture a/c .... Dr. (100×2) 200
To share capital a/c (100×10) 1000
To share premium a/c (100×5) 500
(Being share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (100×1) 100
To capital reserve a/c 100
(Being share forfeiture amount transferred to capital reserve.)
SAQ 17 - Y. Ltd. forfeited 500 shares of Rs. 100 each issued at 10% premium
due to non payment of Rs. 40 per share (including premium) on allotment and
Rs. 20 per share on first call. The final call of Rs. 20 per share was not yet
called up. Out of forfeited shares 250 shares were re-issued at Rs. 75 per
share including premium the paid up value of which was Rs. 80.
(a) Share capital a/c .... Dr. (500×80) 40,000
Share premium a/c .... Dr. (500×10) 5000
To calls in arrear a/c (500×60) 30,000
To share forfeiture a/c (500×30) 15,000
(Being share forfeited.)
(b) Bank a/c .... Dr. (250×75) 18,750
Share forfeiture a/c .... Dr. (250×15) 3750
To share capital a/c (250×80) 20,000
To share premium a/c (250×10) 2500
(Being share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (250×15) 3750
To capital reserve a/c 3750
(Being share forfeiture amount transferred to capital reserve.)
SAQ 18 - M. Ltd. forfeited 400 shares of Rs. 10 each issued at 10% premium due
to non payment of Rs 4 per share (including premium) on allotment and Rs. 2
per share on first call. The final call of Rs.2 per share was not yet called
up. Out of forfeited shares 150 shares were re-issued at Rs.7 per share
including premium the paid up value of which was Rs.8.
(a) Share capital a/c .... Dr. (400×8) 3200
Share premium a/c .... Dr. (400×1) 400
To calls in arrear a/c (400×6) 2400
To share forfeiture a/c (400×3) 1200
(Being share forfeited.)
(b) Bank a/c .... Dr. (150×7) 1050
Share forfeiture a/c .... Dr. (150×2) 300
To share capital a/c (150×8) 1200
To share premium a/c (150×1) 150
(Being share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (150×1) 150
To capital reserve a/c 150
(Being share forfeiture amount transferred to capital reserve.)
SAQ 19 - N. Ltd. forfeited 400 shares of Rs. 100 each issued at 5% premium due
to non payment of Rs 30 per share (including premium) on allotment and Rs. 25
per share on first call. The final call of Rs.20 per share was not yet called
up. Out of forfeited shares 300 shares were re-issued at Rs.95 per share as
fully paid up including premium.
(a) Share capital a/c .... Dr. (400×80) 32,000
Share premium a/c .... Dr. (400×5) 2000
To calls in arrear a/c (400×55) 22,000
To share forfeiture a/c (400×30) 12,000
(Being share forfeited.)
(b) Bank a/c .... Dr. (300×95) 28,500
Share forfeiture a/c .... Dr. (300×10) 3000
To share capital a/c (300×100) 30,000
To share premium a/c (300×5) 1500
(Being share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (300×20) 6000
To capital reserve a/c 6000
(Being share forfeiture amount transferred to capital reserve.)
SAQ 20 - N. Ltd. forfeited 300 shares of Rs. 10 each issued at 10% premium due
to non-payment of Rs 3 per share (including premium) on allotment and Rs. 2
per share on first call. The final call of Rs.2 per share was not yet called
up. Out of forfeited shares 100 shares were re-issued at Rs.9 per share as
fully paid up including premium.
(a) Share capital a/c .... Dr. (300×8) 2400
Share premium a/c .... Dr. (300×1) 300
To calls in arrear a/c (300×5) 1500
To share forfeiture a/c (300×4) 1200
(Being share forfeited.)
(b) Bank a/c .... Dr. (100×9) 900
Share forfeiture a/c .... Dr. (100×2) 200
To share capital a/c (100×10) 1000
To share premium a/c (100×1) 100
(Being share reissued at discount.)
(c) Share forfeiture a/c .... Dr. (100×2) 200
To capital reserve a/c 200
(Being share forfeiture amount transferred to capital reserve.)
Forfeiture and Re-issue of Shares Initially Issued at Discount
Share discount a/c and discount on issue of share a/c are same and give same
meaning. So don't get confused while reading with below pictures.
SAQ 21 - S. Ltd. issued 10,000 equity share of Rs. 100 each at discount of 10%
payable as follows: on application Rs. 25, on allotment Rs. 20, on first call
Rs. 20 and on final call Rs. 25.
A shareholder holding 500 shares did not pay the calls money. His shares were
forfeited and forfeited shares were reissued at Rs 90 per share as fully paid.
SAQ 22 - A. Ltd. issued 40,000 equity shares of Rs. 10 each at discount of 10%
payable as follows: Rs. 3 on application, Rs. 2 on allotment, Rs. 4 on first
and final call
A shareholder who held 500 shares failed to pay call money and his shares were
forfeited. Half of the forfeited shares were reissue at Rs. 8 per share as
fully paid.
SAQ 23 - Z. Ltd. forfeited 1,000 shares of Rs. 10 each issued at 10% discount
due to nonpayment of Rs.2 per share on first call and Rs. 3 per share on final
call. Out of forfeited shares 400 shares were re-issued at Rs.7 per share as
fully paid.
SAQ 24 - A Co. Ltd. forfeited 1000 shares of Rs. 100 each at 10% discount
(called up Rs. 80), due to non-payment of first calls Rs. 20. Out of these
only 800 share were reissued at Rs. 80 per share as fully paid.
SAQ 25 - X. Co. Ltd. forfeited 500 shares of Rs. 100 each issued at 10%
discount, due to non-payment of allotment Rs. 40 and calls Rs. 20. Out of
these forfeited shares, only 300 shares were reissued at Rs. 70 per share
without discount.
SAQ 26 - P.Co.Ltd. forfeited 200 shares of Rs. 10 each issued at 10% discount,
due to non-payment of allotment Rs. 3 and calls Rs. 1. Out of these forfeited
shares, only 100 shares were reissued at Rs. 8 per share excluding discount.
Long Answer Questions
LAQ 1 - Pokhara Ltd. registered with an authorized capital of Rs. 1,00,00,000
divided into 1,00,000 shares of Rs.100 each. The company issued 75,000 shares
at a discount of 5%, payable as: Rs. 30 on application, Rs. 20 on allotment,
Rs. 20 on first call and Rs. 25 on final call.
Application money has been received in all the shares and amount is allotted.
A shareholder holding 500 shares did not pay the calls money. His shares were
forfeited and out of this 300 shares were reissued at Rs 90 per share as fully
paid.
Required: Journal entries for share application, share allotment, share first
call, share final call, share forfeiture, Re-issue of shares and transfer.
LAQ 2 - B. Ltd. registered with an authorized capital of 1,00,000 equity
shares of Rs.100 each. It invited applications for 50,000 equity shares of Rs.
100 each payable as under: On application Rs. 20, on allotment Rs. 40, On
first and final call Rs. 40.
Applications were received for 100,000 shares. The allotment was made as
follows: To the applicants of 20,000 shares - Nil, To the applicants of 20,000
shares - Full, To the applicants of remaining shares - 50%
It was decided to utilize excess application money in part payment of
allotment. All money was duly received except a holder who applied for 1,000
shares and was given 500 shares failed to pay the allotment and call money.
The Board of Directors decided to forfeit these shares. Later on, forfeited
shares were reissued at Rs.90 as fully paid.
Required: Journal entries for: application, allotment, calls, forfeiture,
re-issue, and transfer.
LAQ 3 - A Company limited issued 25,000 equity shares of Rs. 100 each at a
premium of 10% payable as follows: on application Rs.25, on allotment Rs.60
(including premium) and on first and final calls Rs. 25.
Applications were received for 41,000 shares. These shares were allotted on a
pro-rata basis to the applicants for 30,000 and applications for 11,000 shares
were rejected and refunded. Money excess paid on applications was utilized
towards the sum due on allotment. Sujit to whom 100 shares were allotted,
failed to pay allotment and first and final calls money and his shares were
forfeited. Later on, forfeited shares were reissued at Rs. 90 per share as
fully paid up.
Required: Journal entries for: application, allotment, first and final calls,
forfeiture, re-issue, and transfer.
LAQ 4 - A company limited issued 10,000 shares of Rs. 100 each payable as
under: on application Rs. 40, on allotment Rs. 30 and on first and final calls
Rs. 30.
Applications were received for 16,000 shares and allotment was made on the
following basis: To applicants for 6,000 shares - Full, To applicants for
8,000 shares - 4,000 shares and To applicants for 2,000 shares - Nil.
All excess amount paid on the application is to be adjusted against the amount
due on the allotment and subsequent calls. The shares were fully called and
paid-up except one shareholder to whom 200 shares were allotted failed to pay
first and final calls and his shares were forfeited.
Required: Journal entries for Allotment, First and Final Call and Forfeiture.
LAQ 5 - A Co. Ltd. issued 4,000 equity shares of Rs. 100 each at a premium of
Rs.10 per share payable as follows: On application Rs. 20 per share, On
allotment Rs. 50 per share (including premium), On the first and final call
Rs. 40 per share.
Applications were received for 6,000 shares. These shares were allotted on a
pro-rata basis to the applicants of 4,800 shares and applications for 1,200
shares were rejected. Money overpaid on applications was utilized towards sum
due on allotment. Rajesh to whom 200 shares were allotted failed to pay
allotment and first and final call money, hence his shares were forfeited.
Required: Journal entries for allotment, first and final calls and forfeiture.
