CBSE 2025, Compartment, Set 1

Question

Pass necessary journal entries for forfeiture and reissue of shares in the following case:
XYZ Ltd. forfeited 20,000 shares of ₹10 each issued at a premium of ₹1 per share, for non-payment of second and final call of ₹2 per share. 70% of these shares were reissued at ₹7 per share fully paid-up.

Edvaya · Accepted Answer

The correct answer is Subjective. **Journal Entries in the books of XYZ Ltd.** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | (i) | Share Capital A/c Dr. ($20,000 	imes 10$) To Share Forfeiture A/c ($20,000 	imes 8$) To Equity Share Second and Final Call / Calls-in-Arrears A/c ($20,000 	imes 2$) *(20,000 shares forfeited for non-payment of final call)* | | 2,00,000 | 1,60,000 40,000 | | (ii) | Bank A/c Dr. ($14,000 	imes 7$) Share Forfeiture A/c Dr. ($14,000 	imes 3$) To Share Capital A/c ($14,000 	imes 10$) *(Reissue of 14,000 shares [70%] at ₹7 per share fully paid up)* | | 98,000 42,000 | 1,40,000 | | (iii)| Share Forfeiture A/c Dr. To Capital Reserve A/c *(Gain on reissue transferred to capital reserve)* | | 70,000 | 70,000 | *Working Note for Capital Reserve:* Amount forfeited per share = ₹8. (Premium was received, so ignored). Discount on reissue per share = ₹3. Gain per share = $8 - 3 = ₹5$. Total transfer = $14,000 	imes 5 = ₹70,000$.

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Accountancy > Accounting For Companies > Accounting For Share Capital

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