Page 178 - ISCDEBK-12

7.14 Double Entry Book Keeping (Section A)—ISC XII

Notes to Accounts
1. Share Capital `
Authorised Capital
20,000 Equity Shares of ` 10 each 2,00,000
Issued Capital
14,000 Equity Shares of ` 10 each 1,40,000
(Out of the above 6,000 shares have been issued as fully paid-up pursuant to a contract for
consideration other than cash, i.e., for purchase of building)
Subscribed Capital
Subscribed and fully paid-up
6,000 Equity Shares of ` 10 each 60,000
(Above shares have been issued as fully paid-up pursuant to a contract for consideration
other than cash, i.e., for purchase of building)
Subscribed but not fully paid-up
7,250 Equity Shares of ` 10 each; ` 5 called-up 36,250
Less: Calls-in-Arrears 1,250
35,000
Add: Forfeited Shares A/c 2,000 37,000
97,000
2. Fixed Assets (Tangible)
Building 60,000
3. Cash and Bank Balances
Cash at Bank 37,000

Illustration 11 (Forfeiture of Shares Originally Issued at Premium and Reissued at Discount).
A Ltd. forfeited 60 shares of ` 10 each issued at a premium of 20% to Ram who had
applied for 72 shares, for non-payment of the allotment money of ` 5 per share (including
premium) and the first and final call of ` 5 per share. Out of these 20 shares were reissued
to Shyam credited as fully paid for ` 9 per share.
Give Journal entries to record forfeiture and reissue of shares assuming that A Ltd. follows
the policy of adjusting excess application money towards other sums due on shares.

Solution: In the Books of A Ltd.
Journal
Date Particulars L.F. Dr. (`) Cr. (`)
Share Capital A/c ...Dr. 600
Securities Premium Reserve A/c ...Dr. 120
To Forfeited Shares A/c 144
To Calls-in-Arrears (WN 1) 576
(Being 60 shares forfeited for non-payment of allotment money and call)
Bank A/c ...Dr. 180
Forfeited Shares A/c ...Dr. 20
To Share Capital A/c 200
(Being 20 forfeited shares reissued as fully paid-up for ` 9 per share)

Forfeited Shares A/c ...Dr. 28
To Capital Reserve A/c (WN 2) 28
(Being the gain on reissue transferred to Capital Reserve)