BASED ON COMPENTENCY ON SHARE CAPITAL

SOLVED SUMS
01 Complete the following journal entries related to forfeiture of shares of Mohan ltd.

Date Particulars L.F Dr. Rs. Cr. Rs.

Share Capital A/C Dr. 500
To Share First Call A/C .........
To Share Final Call A/C ..........
To Share Forfeited A/C ..........
(Being 50 shares forfeited for non-payment of first
call of Rs. 2 and final call of Rs. 3
.................................... Dr. ..........
.. .................................... Dr ..........
To Share Capital A/C 300
(Being 30 shares issued @ Rs. 8 per share fully paid
up)
.. .................................... Dr ..........
To ...................................... ..........
(Being balance of share forfeited A/C transferred to
capital reserves A/C)

Soution

Date Particulars L.F Dr. Rs. Cr. Rs.

Share Capital A/C Dr. 500
To Share First Call A/C 100
To Share Final Call A/C 150
To Share Forfeited A/C 250
(Being 50 shares forfeited for non-payment of first
call of Rs. 2 and final call of Rs. 3
Bank A/C Dr. 240
Share Forfeited A/C Dr 60
To Share Capital A/C 300
(Being 30 shares issued @ Rs. 8 per share fully paid
up)
Share Forfeited A/C Dr 90
To Capital Reserves A/C 90
(Being balance of share forfeited A/C transferred to
capital reserves A/C)

02 ABC Ltd issue d 10,000 shres at Rs. 10 per share. It also issued 2,000 shares to its
promoters. You are required to complete the following incomplete information in the journal
of ABC Ltd.

Solution

Date Particulars L.F Dr. Rs. Cr. Rs.

................................. Dr. .........
To................................ .........
(Being application money received on 10,000 shares
at Rs. 2 per shares)
................................. Dr. 20,000
To................................ 20,000
(Being transfer of application money to share capital
 account)
................................. Dr. .........
To................................ .........
(Being allotment money due on 10,000 shares at
Rs. 2 per shares)
................................. Dr. .........
To................................ .........
(Being allotment money received)
................................. Dr. .........
To................................ .........
(Being first call due on 10,000 shares @ Rs. 3 per
shares)
................................. Dr. .........
To................................ .........
(Being first call money received)
................................. Dr. .........
To................................ .........
(Being final call due on 10,000 shares @ Rs. 3 per
share)
Bank A/C Dr. 30,000
To Share second and final call A/C 30,000
(Being money due on final call received)
................................. Dr. 3,000
To Bank A/C 3,000
(Being expenses incurred on issue of shares paid )
................................. Dr. .........
To................................ .........
(Being allotment money received)

Solution

Date Particulars L.F Dr. Rs. Cr. Rs.

Bank A/C Dr. 20,000
To Share Application A/C 20,000
(Being application money received on 10,000 shares
at Rs. 2 per shares)
Share Application A/C Dr. 20,000
To Share capital A/C 20,000
(Being transfer of application money to share capital
account)
Share Allotment A/C Dr. 20,000
To Share capital A/C 20,000
(Being allotment money due on 10,000 shares at
Rs. 2 per shares)
Bank A/C Dr. 20,000
To Share Allotment A/C 20,000
(Being allotment money received)
Share first call A/C Dr. 30,000
To Share capital A/C 30,000
(Being first call due on 10,000 shares @ Rs. 3 per
shares)
Bank A/C Dr. 30,000
To Share first call A/C 30,000
(Being first call money received)
Share second and final call A/C Dr. 30,000
To Share capital A/C 30,000
(Being final call due on 10,000 shares @ Rs. 3 per
share)
 Bank A/C Dr. 30,000
To Share second and final call A/C 30,000
(Being money due on final call received)
Share issue expenses A/ Dr. 3,000
To Bank A/C 3,000
(Being expenses incurred on issue of shares paid )
Incorporation cost AC Dr. 20,000
To Share capital A/C 20,000
(Being 2,000 shares issued as fully paid to the
promoters )

03. You are required to complete the following incomplete journal entries related to
forfeiture of shares originally issued at a premium

Date Particulars L.F Dr. Rs. Cr. Rs.

Share capital A/C Dr. 350
....................................... Dr. 250
To ........................................... ..........
To ........................................... ..........
(Being 50 shares forfeited for non-payment o
fallotment money of rs. 9 per share including Rs. 5
of securities premium per share)
Bank A/C Dr. 600
To ........................................... .........
To ........................................... .........
(Being 50 forfeited shares reissued at Rs. 12 each
fully paid-up)

........................................... Dr. ...........

To ......................................... ..........
(Being profit on reissue of forfeited shares
transferred to capital reserve)

Solution

Date Particulars L.F Dr. Rs. Cr. Rs.

Share capital A/C Dr. 350
Securities premium reserve A/C Dr. 250
To Shares forfeited A/C 150
To Share allotment A/c 450
(Being 50 shares forfeited for non-payment o
allotment money of Rs. 9 per share including Rs. 5
of securities premium per share)
Bank A/C Dr. 600
To Share capital A/C 500
To Securities Premium Reserve A/c 100
(Being 50 forfeited shares reissued at Rs. 12 each
fully paid-up)

Shares forfeited A/C Dr. 150

To Capital Reserves A/C 150
(Being profit on reissue of forfeited shares
transferred to capital reserve)
 SUMS FOR PRACTICE
04 VVN ltd had issued 1,00,000 equity shares of Rs. 10 each at a premium of Rs. 3 per
share payable with application money. While passing the journal entries related to the issue
some balances are left. You are required to complete these blanks

Solution

Date Particulars L.F Dr. Rs. Cr. Rs.

2020- ................................. Dr. .........
Jan 5 To................................ .........
(Being application money received on 1,40,000
shares at Rs. 6 per shares)
Jan 17 Equity Share Application A/c Dr. ..........
To................................ ..........
To................................ ...........
To................................ ...........
To................................ ...........
(Application money transferred to share capital
account, securities premium account, refunded for
20,000 shares for rejected applications and balance
adjusted towards money due on allotment as shares
were allotted on pro-rata basis.
2020- ................................. Dr. .........
Jan 17 To................................ .........
(Being allotment money due @ 4 per share)
2020- ................................. Dr. .........
Feb 20 To................................ .........
(Being allotment money received)
2020- ................................. Dr. .........
Apr 01 To................................ .........
(Being final call money due)
2020- ................................. .........
Apr 20 Calls in arrears A/C Dr. 3,000
To................................ .........
(Being first and final call money received)
2020- ................................. Dr. ..........
May 20 To................................ ..........
To................................ ............
(forfeited the shares on which first and filial call was
not received.
2020- ....................................
June .....................................
20 To................................
(forfeited shares are reissued)
2020- ..................................... ..........
Feb 20 To................................ ............

05 Mahindra ltd had issued 1,00,000 equity shares of Rs. 10 each at a premium of Rs. 3
per share payable with application money. While passing the journal entries related to the
issue some balances are left. You are required to complete these blanks

Solution

Date Particulars L.F Dr. Rs. Cr. Rs.

2020- Share capital A/C Dr. .........
Jan 5 ................................. Dr. ..........
To Shares forfeited A/C 6,000
To Share allotment a/C ............
To Share first call A/C ............
(Being 2,000 shares of Rs. 10 each Rs. 8 called up
issued at a premium of Rs. 2 forfeited for non-
payment of allotment @ Rs. 5 including a premium
and first call of Rs. 2.)
Bank A/C Dr 19,600
To Share capital A/c ..........
To ------------------- ............
Being 1,400 shares reissued for 19,60 as fully paid)
Shares Forfeited A/C Dr ..........
To Capital Reserves A/C ............
(Being profit on reissue of forfeited shares
transferred to capital resave)