X ltd. issued 10,000 equity shares of rs. 10/- payble rs. 3 on application 3 on allotment the balnce by two calls the amount so realize with the exception of the following
1. mr A holding 100 shares didnot pay the amount due on first call &mr. B holding 100% didnt pay the amoount on final call. all the shares were forfited & re issue only 150 shares ( all of A & balance of B) to Mr. D @ rate of Rs. 8 per Share. so the forfeiture & re issue entry.
i am confused about that either A's share were forfetted just after 1st call or second call was also asked for . or there was any penality system for payment after calls & if its different in different situaion whats the logic to know the company policy for forfeiture. plz expalin in detail
As per the question, it implies that shares held by A will be forfeited after the second and final call.
However, penalty for the non-payment of call money is charged in the form of interest on calls-in-arrears. Interest on calls-in-arrears will be charged, if the articles of association of the company permits. This interest is charged as per the rate mentioned in the articles of association of the company, if the articles of association permits for charging interest on calls-in-arrears but silent about the rate of interest then interest will charged at 5% p. a. as per Table A of the Companies Act 1956.
In reference to your query solution has been mentioned below.
Issued 10,000 Shares of Rs 10 each | ||
Payable as: |
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|
Application | Rs | 3 |
Allotment | Rs | 3 |
First Call | Rs | 2 |
Final Call | Rs | 2 |
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| 10 |
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Books of X Ltd Journal Entries | |||||
Date | Particulars | L.F. | Debit Amount Rs | Credit Amount Rs | |
| Bank A/c | Dr. |
| 30,000 |
|
| To Equity Share Application |
| 30,000 | ||
| (Share application money received for 10,000 Shares of Rs 3 per Share) |
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| Equity Share Application A/c | Dr. | 30,000 |
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| To Equity Share Capital A/c |
| 30,000 | ||
| (Equity share application transferred to share Capital) |
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| Equity share Allotment A/c | Dr. | 30,000 |
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| To Equity share Capital A/c |
| 30,000 | ||
| (Share allotment due on 10,000 shares at Rs 3 per share) |
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| Bank A/c | Dr. | 30,000 |
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| To Equity Share Allotment A/c |
| 30,000 | ||
| (Equity share allotment money received) |
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| Equity Share First Call A/c | Dr. | 20,000 |
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| To Equity Share Capital A/c |
| 20,000 | ||
| (Equity share first call due on 10,000 shares at Rs 2 per share) |
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| Bank A/c | Dr. | 19,800 |
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| Calls-in-Arrears A/c | Dr. | 200 |
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| To Equity Share First Call A/c |
| 20,000 | ||
| (Equity share first call of Rs 2 per share received on 9,800 shares and holder of 100 failed to pay it) |
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| Equity Share Final Call A/c | Dr. | 20,000 |
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| To Equity Share Capital A/c |
| 20,000 | ||
| (Share final call due on 10,000 Shares of Rs 2 per share) |
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| Bank A/c | Dr. | 19,600 |
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| Calls-in-Arrears A/c | Dr. | 400 |
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| To Equity Share final Call A/c |
| 20,000 | ||
| (Share final call of Rs 2 per share received on 9,600 share and holders of 400 shares failed to pay it) |
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| Equity Share Capital A/c | Dr. | 1,000 |
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| To Share Forfeature A/c |
| 600 | ||
| To Calls-in-Arrears A/c |
| 400 | ||
| (100 Shares of Rs 10 each held by Mr. A forfeited for the non-payment Rs 4 per share) |
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| Equity Share Capital A/c | Dr. | 1,000 |
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| To Share Forfeature A/c |
| 800 | ||
| To Calls-in-Arrears A/c |
| 200 | ||
| (100 Share of Rs 10 each held by B forfeited for the non-payment of Rs 2 per share) |
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| Bank | Dr. | 1,200 |
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| Share Forfeiture A/c | Dr. | 300 |
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| To Equity Share Capital |
| 1,500 | ||
| (150 Shares of Rs 10 each reissued of Rs 8 per share, fully paid-up) |
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| Share Forfeiture A/c | Dr. | 700 |
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| To Capital Reserve A/c |
| 700 | ||
| (Balance of 150 reissued in share forfeiture Account transferred to capital Reserve) |
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Working Notes:
Calculation of Capital Reserve | |||
A’s Shares |
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Share Forfeiture | Cr Rs | 6 | Per Share |
Share Forfeiture | Dr Rs | 2 | Per Share |
| Cr | 4 | Per Share |
Capital Reserve on reissue of 100 shares = 100 × 4 = 400 | |||
B’s Shares |
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Share Forfeiture | Cr Rs | 8 | Per Share |
Share Forfeiture | Dr Rs | 2 | Per Share |
| Cr Rs | 6 | Per Share |
Capital Reserve on reissue of 50 shares = 50 × 6 = Rs 300 | |||
Capital Reserve 150 Shares = 400+300 | |||
| = Rs 700 | ||
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