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Re-issue part of shares and capital reserve

Hari (student) (119 Points)

20 November 2011

400 shares forfeited and each at 10/- with premium of 10%. on application 2/-, allotment 3/-(including premium), first call 3/- and final call 3/-. these share were forfeited for non payment of first call money. and re-issued 350 share each at 8/- fully paid up. how much capital reserve

in case premium found first call how to calculate.

Hari, No: 9533149809, hari.vemula83 @ hotmail.com

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4 Replies

Ankit Hinduja (Student) (1227 Points)
Replied 21 November 2011

Entry for forfeiture :

Share Capital a/c dr.(400*10) 4000

To Share first call a/c(400*3) 1200

to share final call a/c(400*3) 1200

To share forfeiture a/c(400*4) 1600

Entry for re-issue :

Bank a/c dr.(350*8) 2800

Forfeiture a/c dr(350*2) 700

To Share capital a/c(350*10) 3500

Entry for transfer to capital reserve:

Forfeiture a/c dr.(350*2) 700

To Capital reserve a/c 700

working note for amt. to be transferred to capital reserve:

Amt. forfeited per share - 1600/400 = 4

Less:Loss on re-issue -700/350 =2

surplus =2( to be transferred i.e 350*2=700)

I hope ur doubt is cleared....

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Durga prasad (Student CA CPT ) (116 Points)
Replied 13 June 2013

can any one explain

Mr. Bajaj who was the holder of 200 Equity shares of Rs. 100 each of Canny Ltd., on which
only rs. 75 per share has been called up, couldn't pay his dues on allotment and first call
each at rs. 25 per share. The director forfeited the above share and reissued 150 of such share
to Mr. Birla at Rs. 65 per share paid up as Rs. 75 per share. The amount to be transferred to capital
reserve account will be

a) Rs. 1500 b)Rs. 2250 c) Rs. 2750 d) Rs. 3250

N.Naveena Maheswara Rao (Assistant manager for accounts) (1096 Points)
Replied 23 August 2013

Answer is Rs.2,250 Entry for forfeiture Share capital...Dr Rs 15,000 (200X75) Forfeited shares ...Cr Rs. 5,000 (200X25) Allotment & Fisrt call A/c ...Cr Rs.10,000(200X50) So we have a profit of Rs.25 per share in forfeited shares account. Loss on reissue is Rs.10 per share Rs 75 - 65) Since we have reissued 150 shares, we should close the forfeited shares account in respect of 150 shares. Balance on F/s account for 150 shares = 3,750 (150x25) Set off of loss on reissue of 150 shares = 1500 (150X20} Balance left to be transferred to Capital Reserve = 2,250. Hope u understand....