Reissue of shares issued at Premium:

When shares previously issued at a premium on which premium has been already received fully, share premium need not be recorded
again on reissue of shares.

Illustration :

A Company issued 10,000 equity shares of Rs.10 each at premium of Rs.3 per share payable as follows:

on application Rs.4 per share

on allotment Rs.5 per share (including premium)

on first and final call Rs.4 per share

Subscriptions were received for 13,000 shares. The excess money was refunded and the allotment money was received in full. The first
and final call was made in due course and the amount due was received with the exception of 100 shares. These shares were forfeited and subsequently re-issued as fully paid for Rs.8 per share. Pass Journal entries recording the above transactions.

Solution:

Journal Entries

Date	Particulars	LE	Debit Rs.	Credit Rs.
	Bank A/c                                                                               Dr		52,000
	To Share Application A/c			52,000
	(Application money received for 13,000 shares @ Rs.4 per share)
	Share Application A/c                                                   Dr		52,000
	To Share Capital A/c			40,000
	To Bank A/c			12,000
	(Application money received on 10,000 shares transferred to Share Capital A/c and that on 3,000 shares refunded)
	Share Allotment A/c                                                   Dr		50,000
	To Share Capital A/c			20,000
	To Securities Premium A/c			30,000
	(Allotment money due on 10,000 shares including premium, )
	Bank A/c                                                                    Dr		50,000
	To Share Allotment A/c			50,000
	(Allotment money received )
	Share First and Final Call A/c                                  Dr		40,000
	To Share Capital A/c			40,000
	(First and fmal call money due on 10,000 shares @ Rs.4 per share )
	Bank A/c        (Rs.40000 —100 x 4)                         Dr		39,600
	To Share First and Final Call A/c			39,600
	(First and Final call money received)

	Share Capital A/c (100 x Rs.10)                         Dr		1,000
	To Share First & Final Call A/c (100 x Rs. 4)			400
	To Forfeited Shares A/c (100 x Rs.6)			600
	(Forfeiture of 100 shares on which first and final call was due)
	Bank A/c (100 x Rs.8)                                                  Dr		800
	Forfeited Share A/c (100 x Rs.2)                             Dr		200
	To Share Capital A/c			1,000
	(Re-issue of 100 forfeited shares at Rs.8 per share as fully paid up )

	Forfeited Shares A/c                                                  Dr.		400
	To Capital Reserve A/c			400

(Profit on re-issue of forfeited shares transferred to Capital Reserve)

 

Illustration : 

Surya Ltd. issued 50,000 equity shares of Rs.10 each at premium of 10% payable as under:

on application                                Rs.3

on allotment                                   Rs.5                  (including premium)

on first and final call                     Rs.3

The whole of the issue was called for by the company and all the money were duly received except call money on 500 shares. These
shares were, therefore, forfeited and later on re-issued at Rs.9 per share as fully paid.

Solution:

In the Books of Surya Ltd.
Journal Entries

Date	Particulars	L.F.	Debit	Credit
	Bank A/c                                                             Dr.		1,50,000
	To Share Application A/c			1,50,000
	(Application money received for 50,000 shares @ Rs.3 per share)
	Share Application A/c                                  Dr		1,50 ,000
	To Share Capital A/c			1,50,000
	(Transfer of share application money to share Capital A/c )
	Share Allotment A/c                                   Dr		2,50,000
	To Share Capital A/c			2,00,000
	To Securities Premium A/c			50,000
	(Allotment money due on 50,000 shares including premium)
	Bank A/c                                                         Dr		2,50,000
	To Share Allotment A/c			2,50,000
	(Allotment money received)
	Share First and Final Call A/c               Dr		1,50,000
	To Share Capital A/c			1,50,000
	(Final call money due on 50,000 shares @ Rs.3 per share )
	Bank A/c                                                      Dr		1,48,500
	To Share First and Final Call A/c			1,48,500
	(Final call money received on 49,500 shares)
	Share Capital A/c                                     Dr		5,000
	To Share First and Final Call A/c			1,500
	To Forfeited Shares A/c			3,500
	(Forfeiture of 500 shares on which allotment and first call were due)
	Bank A/c                                                      Dr		4,500
	Forfeited Shares A/c                              Dr		500
	To Share Capital A/c			5,000
	(Re-issue of forfeited shares as fully paid up at Rs.9 per share)
	Forfeited Shares A/c                            Dr		3,000
	To Capital Reserve A/c			3,000
	(Profit on re-issue transferred to capital reserve)

 

Note: Securities Premium A/c has been debited on forfeiture because the amount of premium remains in arrear.