Company Accounts: Forfeiture and re-issue of shares doubt

This query is : Resolved 

14 October 2007

1. How to calculate surplus in case per share re-issued? What is the safe and appropriate technique ?
MSN Co. issued 3000 equity shares of Rs 10 each payable as Rs 3 per share on Application, Rs 5 per share (including Rs 2 as premium)on allotement and Rs 4 per share as final call. All share are subscribed. All paid except Ram, holding 50 shares failed to pay allotement and call money, and Shyam holding 100 shares failed to pay the call money. All their shares were forfeited. Out of them, 125 shares(including whole of Ram’s shares) were re-issued to Jaadu as fully paid up at a discount of Rs 2 per share. Calculate money transferred to capital reserve.

Mridula (Expert)
23 October 2007

Dear Sushant,

Entry on the forfeiture of Ram share

Sh Cap. ---(50*10)-- Dr. 500
Sh prem.---(50*2)----Dr. 100
To Sh. Allot.(50*5) 250
To Sh. Call Money (50*4) 200
To Forfeited Sh. (B/F) 150

For Shyam Share:

Sh Cap.--- (100*10)----Dr. 1000
To call(100*4) 400
To Forfeited sh.(b/F) 600

On Reissue:

Bank -- (125*8)---- Dr. 1000
Forfeited sh. (125*2)Dr. 250
To Sh. Capital 1250

Now calculation of CR.

Ram: forfeited 50 Sh
Reissued 50 Sh.

Amt transferred to FF Share ac on REISSUED SHARES: 150/50*50=150

150(Amount Transferred/50(Sh Forfeited)*50(Sh. Reissued)
Less: Dis. on Reissue (50*2) = 100
Amt Tranfer to CR 50


Forfeited : 100 Sh
Reissued : 75 Sh.

Amt transferred to FF Share Account on Reissued Share: 400/100*75 = 300
less Discount (75*2) 150
Transfer to CR 150

Total Tranfer to CR. (50+150) 200
Balance of Forfeited Shares account (25 Shares of shyam forfeited but not reissued)
= 400/100*25= 100 Rs.

Cross check:
Total Credit to FF shares A/c (150+400)= 550
Dr to FF Sh for Discount = 250
Dr to Ff Sh A/c for CR = 200
Balance of FF Shares A/c = 100 Total 550/-

If you have any further question,you are welcomed.

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