Re-issue part of shares and capital reserve

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....

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

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....

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