Reissue of shares issued at Discount :

When shares previously issued at discount are reissued after forfeiture the discount should be brought into account.

Illustration : 

Madhina Company Ltd. issued 1000 shares of Rs.10 each at discount of Re.1 payable as follows:

Rs.3 on  Application

Rs.3 on  Allotment (along with discount)

Rs. 3 on  First & Final call

All shares were duly subscribed and money was received except from a shareholder who failed to pay the final call amount on 100
shares. The directors forfeited the shares after giving due notice. Later these shares were reissued for Rs.8 fully paid. Pass entries to record forfeiture and reissue.

Solution:

In the Books of Madhina Company Ltd.
Journal Entries

Date	Particulars	L.F.	Debit Rs.	Credit Rs.
	Share capital A/c                                                        Dr.		1000
	To Forfeited shares A/c			600
	To Discount on issue of shares A/c			100
	To Final call A/c			300
	(Forfeiture of 100 shares for non-payment of call money)
	Bank A/c.                                                                       Dr.		800
	Discount on issue of shares A/c                               Dr.		100
	Forfeited shares A/c                                                   Dr.		100
	To Share capital A/c			1000
	(Reissue of 100 shares @ Rs.8 per share)
	Forfeited shares A/c                                                 Dr.		500
	To Capital reserve A/c			500
	(Profit on reissue transferred to capital reserve)

 

Illustration : 

Kanchana Ltd. forfeited 1000 shares of Rs.10 each issued at a discount of 10% for non payment of first call Rs.2 and second call Rs.3

These shares were reissued to Mr.Arun upon a payment of Rs.7,000 as fully paid.

Solution:

In the books of Kanchana Ltd.
Journal Entries

Date	Particulars	L.F.	Debit	Credit
	Share Capital A/c                                                   Dr		10,000
	To Forfeited Shares A/c			4,000
	To Discount on Issue of Share A/c			1,000
	To First Call A/c			2,000
	To Second Call A/c			3,000
	(Forfeited of 1000 shares on non payment of call money)
	Bank A/c                                                                  Dr		7,000
	Discount on Issue of Share A/c                      Dr		1,000
	Forfeited Shares A/c                                          Dr		2,000
	To Share Capital A/c			10,000
	(Reissued of Rs.7 as fully paid)
	Forfeited Shares A/c                                        Dr		2,000
	To Capital reserve			2,000
	(Profit on reissue transferred to Capital reserve)