Page 66 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 3: Reissue of Forfeited Shares and Bonus Issue

Basis loss on reissue of share = 2505 = 1,250 Notes
Profit on reissue of shares 11,250

Example 3: (Reissue of forfeited shares previously issued at premium)
Dynamic Ltd. makes an issue of 5,000 equity shares of 100 each at a premium of 12.50 per
share payable as follows:
1. 12.50 on application,
2. 25.00 on allotment (including premium),
3. 50.00 on first call,

4. 15 on second all,
5. 10 on final call.
The application and allotment money are duly received and in addition, holders of 2,500 shares
pay in full on allotment. Holders of 100 shares fail to pay first call and after due notice their
shares are forfeited. The amounts payable on second call (made after forfeiture) are paid in full,
except that a holder of 50 shares fails to pay. 75 of the 100 shares forfeited are reissued, credited
with 90 paid for 65 per share. The new shareholder pays these shares in full. The balance of
10 per share is being treated as calls-in-advance. The final call is met in full including the arrears
of the second call.
Show the necessary journal entries including cash in the books of Dynamic Ltd.

Solution:
Dynamic Limited Journal
Dr. Dr.
Date Particulars L.F.
Bank Account Dr. 62,500
To Equity Shares Application Account 62,500
(Being application money received on 5,000 shares @
12.5 per share)
Equity Share Application Account Dr. 62,500
To Equity Share Capital Account 62,500
(Being transfer of application money to shares capital
account)
Equity Share Allotment Account Dr. 62,500
To Equity Share Capital Account 62,500
(Being allotment money due on 5,000 shares @ 12.5
each)
Bank Account Dr. 3,12,500
To Share Allotment Account 62,500
To Share Premium Account 62,500
To Calls-in-Advance Account (2500×75) 1,87,500
(Being allotment money received along-with premium
@ 12.5 each and advance call Pr.-money on 2,500
shares @ 75 each)
Equity Share First Call Account Dr. 2,50,000
To Equity Share Capital Account 2,50,000
(Being first call money due on 5,000 shares @ 50 per
share) Contd...
Bank Account Dr. 1,20,000
Calls-in-Advance Account (2500 × 50) Dr. 1,25,000
To Equity Share First Call Account 2,45,000
(Being receipt of first call money on 4900 shares.) 59
LOVELY PROFESSIONAL UNIVERSITY
Equity Share Capital Account Dr. 7,500
To Equity Share First Call Account 5,000
To Forfeited Share Account 2,500
(Being forfeiture of 100 shares for non-payment of first
call)
Equity Share Second Call Account Dr. 73,500 73,500
To Equity Share Capital Account
(Being second call money due on 4,900 shares @ 15
per share)
Bank Account Dr. 35,250 72,750
Call-in-Advance Account (2500 × 15) Dr. 37,500
To Equity Share Second Call Account
(Being second call money received on 2,350 shares)
Bank Account (75 × 65) Dr. 4,875 6,750
Forfeited Shares Account (75 × 25) Dr. 1,875
To Equity Share Capital Account (75 × 90)
(Being reissue of 75 shares at 65 each 90 paid up at
a discount of 25 each)
Bank Account Dr. 750
To calls in Advance Account 750
(Being receipt of calls-in-advance from new
shareholders on 75 shares @ 10 each)