# Practical Problem 08

#### SOLUTION:

 Journal Entries [For Asha Ltd.] Date Particulars L.F Debit Amount (₹) Credit Amount (₹) (A)(i) Equity Share Capital A/c……………………………………………. Dr 2,000 To Equity Share First Call A/c 300 To Equity Share Final Call A/c 500 To Equity Share Forfeiture A/c 1,200 ( Being forfeiture of 100 equity shares due to non-payment of first call @ ₹3 and final call @ ₹5 per share) (ii) Bank A/c…………………………………………………………………… Dr 1,200 Equity Share Forfeiture A/c ……………………………………….Dr 400 To Equity Share Capital A/c 1,600 ( Being re-issue of 80 forfeited shares @ ₹15 per share as fully paid-up) (iii) Equity Share Forfeiture A/c………………………………………. Dr 560 To Capital Reserve A/c 560 ( Being proportion balance of Share Forfeiture A/c transferred to Capital Reserve A/c) 4160 4160

Working Notes: For A :

(1) Out of 100 forfeited shares, 80 shares were re-issued accordingly Equity Share Capital A/c is debited and credited.

(2) To find the proportionate amount for Forfeiture A/c:

For 100 shares – share forfeiture amount = ₹ 1,200

80 shares – share forfeiture amount =? = ₹ 960

Now, out of this ₹ 960 we used ₹ 400 from Share Forfeiture A/c at the time of re-issue of shares. So, balance of Share Forfeiture A/c = ₹ 960 – ₹ 400 = ₹ 560

 Journal Entries [For Bhakti Ltd.] Date Particulars L.F Debit Amount (₹ ) Credit Amount (₹ ) (B)(i) Equity Share Capital A/c (100 × ₹ 6)………………………… Dr 600 To Calls-in-Arrears A/c 100 To Equity Share Forteifure A/c (100 × ₹ 5) 500 (Being forfeiture of 100 equity share due to non payment of ₹ 100) (ii) Bank A/c (80 × ₹ 6)…………………………………………………. Dr 480 To Equity Share Capital A/c 480 ( Being re-issue of 80 forfeited shares @ ₹ 6 per share as fully paidup) (iii) Equity Share Forfeiture A/c…………………………………….. Dr 400 To Capital Reserve A/c 400 ( Being proportionate balance of Share Forfeiture A/c transferred to Capital Reserve A/c) 1480 1480

Working Notes: For B :

(1) Out of 100 forfeited shares, 80 shares were re-issued accordingly Equity Share Capital A/c is debited for ₹ 600 and credited for ₹ 480.

(2) The proportionate amount debited to Forfeiture A/c :

 For 100 shares – share forfeiture amount debited = ₹ 500 ∴ 80 shares – share forfeiture amount =? = ₹ 400

(80 x 500) / 100 = ₹ 400

Now, shares were re-issued at ₹ 16 per share which is the called-up amount.

Proportionate amount for Forfeiture A/c ₹ 400 will be transferred to Capital Reserve A/c.

 Journal Entries [For Konark Ltd.] Date Particulars L.F Debit Amount (₹ ) Credit Amount (₹ ) (c)(i) Equity Share Capital A/c (50 × ₹ 8) ……………………Dr 400 To Equity Share First Call A/c (50 × ₹ 3) 150 To Equity Share Forteifure A/c 250 ( Being forfeiture of 50 equity shares due to non-payment of first call @ ₹ 3 per share) (ii) Bank A/c (30 × ₹ 7)…………………………………………… Dr 210 Equity Share Forfeiture A/c ………………………………Dr 30 To Equity Share Capital A/c (30 × ₹ 8) 240 ( Being re-issue of 30 forfeited shares @ ₹ 7 per share) (iii) Equity Share Forfeiture A/c……………………………… Dr 120 To Capital Reserve A/c 120 ( Being proportionate balance of Share Forfeiture A/c transferred to Capital Reserve A/c) 760 760

Working Note: For C :

The proportionate amount debited to Forfeiture A/c :

 For 50 shares – share forfeiture amount debited is ₹ 250 ∴30 shares – share forfeiture amount =? = ₹ 150

(30 x 250) / 50 = ₹ 150

Out of this ₹ 30 used for re-issue of forfeited shares.

Balance of Share Forfeiture A/c = ₹ 150 – ₹ 30 = ₹ 120.