Question

Jia Ltd forfeited 50,000, $10 shares that had been paid to $8 but on which a $2 call was outstanding. The company’s constitution provided for any surplus on reissue to be returned to the forfeiting shareholders. The forfeited shares were reissued as paid to $10.00 for a payment of $8.80 per share. Costs of reissue amounted to $5,000. The amount of the surplus repaid to the shareholders whose shares were forfeited is:

Answer 1

Please see the following solution, if u have any doubt, pls let me know:

Journal Entry
	Particulars	Amount $	Amount $
1	Equity Share Capital A/c DR.	500,000
	To Equity Share Forfeited A/c		400,000
	To Equity Share Final Call A/c		100,000
	(forfeiture of 50000 shares of $10 each for non payment of $2 final call recorded)
2	Bank A/c DR.	440,000
	Equity Share Forfeited A/C	60,000
	To Equity Share Capital A/c		500,000
	(Forfeited shares reissued recorded)
3	Equity Share Forfeited A/C	335,000
	To Capital reserve A/c		335,000
	(Surplus amount transferred to shareholders less cost of reissue i.e.$5000
	Calculation of surplus:
	forfeiture amount balance	340,000
	less: cost of reissue	5,000
		335,000