Question

A Ltd issued 20,000 Equity Shares of Rs. 10 each at a premium of Rs. 5 per share, payable as Rs.7 (including premium) on application, Rs. 5 on allotment and the balance after three months of allotment. A shareholder to whom 200 shares were allotted failed to pay the allotment and call money and his shares were forfeited. 160 of the forfeited shares were reissued for Rs. 1,600. Give necessary entries in company’s journal and the Balance Sheet.

Answer 1

Issued and applied 20,000 equity shares of Rs.10 each at premium of Rs. 5 payable as:

Working Note:

1. Share forfeiture of Re-issued shares

Calculation of Capital Reserve

Capital Reserve = Balance share forfeiture after reissue (per share) x Number of shares reissued = Rs.2 x 160 = Rs.320

2. Calculation of balance remaining in share forfeiture A/C (to be Shown in the Balance sheet)

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