X Ltd forfeited 100 shares of Rs 10 each (Rs 8 called-up)issued at a premium of Rs 2 per share to Mr R on which he had paid application money of Rs 5 per share for non payment of allotment money of Rs 5 per share(including premium). Out of this 70 shares were reissued to Mr. Sanjay as Rs. 8 called up for Rs 7 per share . Give necessary journal entries relating to forfeiture and reissue of shares.
Dear Student,
Working Notes :
Amount forfeited on 100 shares is Rs 500 (100*5). Therefore amount forfeited on 70 shares is Rs 350 (70*5)
Loss on re-issue = Rs 70 (70*1)
Therefore, profit on re-issue = Rs 280
Regards,
Journal in the books of X ltd. | |||||
Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
|
Share Capital A/c (100 *8) | Dr. | 800 | |||
Securities Premium A/c (100*2) | Dr. | 200 | |||
To Share Allotment A/c (100*5) | 500 | ||||
To Share Forfeiture A/c (100*5) | 500 | ||||
(Forfeiture of 100 shares for non-payment of allotment money including premium of Rs 2 per share) | |||||
Bank A/c (70*7) | Dr. | 490 | |||
Share forfeiture A/c | 70 | ||||
To Share Capital A/c (70*8) | 560 | ||||
(Re-issue of 70 shares @ Rs 7 per share) | |||||
Share forfeiture A/c | Dr. | 280 | |||
To Capital Reserve A/c | 280 | ||||
(Profit on re-issue transferred to capital reserve) |
Working Notes :
Amount forfeited on 100 shares is Rs 500 (100*5). Therefore amount forfeited on 70 shares is Rs 350 (70*5)
Loss on re-issue = Rs 70 (70*1)
Therefore, profit on re-issue = Rs 280
Regards,