Doubt on Re-Issue and ForFeiture in the Middle of a Call

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5 Points Joined August 2022

Bareli Ltd. has been incorporated with authorized capital of Rs.6.00.000 divided into 60,000 shares of Rs. 10 each . It offers its 50,000 shares for public subscriptttttttion on the following conditions : Application - Rs. 3 per share , 1st Call - Rs. 2 per share , Allotment - Rs. 2 per share and 2nd Call (Final Call too) - Rs. 3 per share . Company received all the  application amount but when allotment is made a shareholder could not pay on his holdings of 200 shares and directors forfeited his shares immediately . After 1st call 150 from the forfeited share reissued for Rs.6 per share . Final call also made on share and duly received . You are required to pass necessary journal entries lor the transactions took place .

 

In this Question , at the time of reissue why 150*7 will be the share capital , why not 150*(7+3) ?

Why 200*(3+2) will be the called up share capital for forfeiture , not 200*10 ?

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On 23 August 2022 at 18:33 Report
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GST Practitioner & Accounts
14936 Points Joined March 2014

pass  entries as follows 

50000  shares were issued  @ 10/= per share .  

Application money -  3 per share 

First  Call               -  2 per share 

Allotment  shares   -  2 per share 

2 Call & Final Call  -  3 per share 

 

1)  Application money fully  received 

     Bank                 A/c   Dr      150000

     To Share Application  money  A/c   Cr     150000

( Application money  3 per share 50000 share ) 

 

2)  Share application       A/c   Dr  150000

     Share Capital             A/c    Cr           150000

( Share application money  transfer to share Capital )  

 

3) Bank                         A/c     Dr  99,600

   To  First  Call             A/c      Cr           99600

(  First  Call  49800 share 2 per share , 200 share Forfeited )  

 

4) First  Call               A/c    Dr    99600

    To Share Capital    A/c    Cr              99600

(  First  Call money transferred  to  share Capital) 

 

5) Bank                    A/c     Dr       99600

   To share Allotment    A/c  Cr                99600

(  49800 share 10 each  ) 

 

6)  Share  Allotment    A/c  Dr    99600

    To Share Application   A/c  Cr    99600

(  share allotment  transfer to share Capital ) 

 

7)  Bank   A/c      Dr       149000

    To Second & Final  Call   A/c  Cr   149000

(  49800 *3  per share ) 

 

8)  Second  &  Final  Call   A/c  Dr   149000

     To Share Capital           A/c  Cr            149000

( Transfer to share Capital )  

 

9)  200  shares were forfeited by director of  Company  

     

     Share Capital       A/c  Dr     2000

     To Share Allotment   A/c   Cr            400

     To Share Forfeiter   A/c    Cr          1600

(  200 shares were forfeited for allotment money not received ) 

 

10)  150 shares out of 200 Forfeited were  reissued @ 6 per share 

       and all  money received .

   

       Bank       A/c      Dr               900

      Share Forfeited    A/c   Dr    1100

      To Share Capital      A/c    Cr            2000

(  reissued money received )                    

     

 

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On 24 August 2022 at 09:06
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GST Practitioner & Accounts
14936 Points Joined March 2014

One more entry , you have to pass is  balance in Forfeiter A/c , transfer to  Capital  reserve .

Share Forfeiter  A/c   Dr      500

To Capital  Reserve   A/c  Cr       500

(   Balance transfer to Capital  Reserve )

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On 25 August 2022 at 16:16


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