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Jia Ltd forfeited 50,000, $10 shares that had been paid to $8 but on which a...

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:

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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

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