Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases : ..........................

Question :Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases : (i) Vipin Ltd. forfeited 10,000 shares of ¥ 10 each issued at a premium of % 1 per share, for non-payment of second and final call of ¥ 2 per share. Out of these, 60% of the shares were reissued at ¢ 7 per share fully paid up. (ii) Deepak Ltd. forfeited 800 shares of % 10 each, ~ 8 per share called up, for non-payment of first call of 3 per share. All the forfeited shares were reissued for 7 12 per share fully paid.

The correct answer is -(i) Journal entries for Vipin Ltd.:

On forfeiture of shares: Bank A/c Dr. [10,000 shares x ¥2] 20,000 Calls-in-arrears A/c Dr. [10,000 shares x ¥2] 20,000 Share capital A/c (10,000 shares) 1,00,000 Share premium A/c (10,000 shares x ¥1) 10,000 To Share forfeited A/c (10,000 shares) 1,00,000 To Calls in advance A/c [10,000 shares x (¥10 + ¥1 - ¥2)] 90,000

(Being shares forfeited for non-payment of final call)

On reissue of shares: Bank A/c Dr. [6,000 shares x ¥7] 42,000 Share forfeited A/c (6,000 shares) 60,000 Calls-in-arrears A/c [6,000 shares x ¥2] 12,000 To Share capital A/c (6,000 shares) 60,000 To Share premium A/c (6,000 shares x ¥1) 6,000 To Calls in advance A/c [6,000 shares x (¥10 + ¥1 - ¥2 - ¥7)] 30,000

(Being 60% of the forfeited shares reissued at ¥7 per share fully paid)

(ii) Journal entries for Deepak Ltd.:On forfeiture of shares: Bank A/c Dr. [800 shares x ¥3] 2,400 Calls-in-arrears A/c Dr. [800 shares x ¥3] 2,400 Share capital A/c (800 shares) 8,000 To Share forfeited A/c (800 shares) 8,000 To Calls in advance A/c [800 shares x (¥10 - ¥8 - ¥3)] 1,600

(Being shares forfeited for non-payment of first call)

On reissue of shares: Bank A/c Dr. [800 shares x ¥7.5] 6,000 Share forfeited A/c (800 shares) 8,000 Calls-in-arrears A/c [800 shares x ¥3] 2,400 To Share capital A/c (800 shares) 8,000 To Share premium A/c (800 shares x ¥0.5) 400 To Calls in advance A/c [800 shares x (¥10 - ¥8 - ¥3 - ¥7.5)] 400

(Being forfeited shares reissued for ¥7.5 per share fully paid)