Share forfeiture & reissue journal entries, step by step
Enter the face value, the calls and the shares that were forfeited. Get the journal entries, the capital reserve and the Share Forfeiture account, with the working written out.
Calls and allotment money (per share)
The amount includes any premium. Type the premium part under “of which premium” too.
₹200 moves from Share Forfeiture A/c to Capital Reserve. Only the forfeiture on the reissued shares counts.
Balance left in Share Forfeiture A/c: ₹0, shown under share capital in the balance sheet.
Share Forfeiture A/c
Forfeiture of 100 shares
| Particulars | Dr ₹ | Cr ₹ |
|---|---|---|
| Share Capital A/c | 800 | |
| To Share Forfeiture A/c | 500 | |
| To Share First Call A/c | 300 |
(Being 100 shares of ₹10 each forfeited for non-payment of First Call.)
Reissue of 100 forfeited shares
| Particulars | Dr ₹ | Cr ₹ |
|---|---|---|
| Bank A/c | 700 | |
| Share Forfeiture A/c | 300 | |
| To Share Capital A/c | 1,000 |
(Being 100 forfeited shares reissued at ₹7 per share, credited as ₹10 paid up, with a discount of ₹300.)
Transfer to Capital Reserve
| Particulars | Dr ₹ | Cr ₹ |
|---|---|---|
| Share Forfeiture A/c | 200 | |
| To Capital Reserve A/c | 200 |
(Being the forfeited amount on the reissued shares, less discount, transferred to Capital Reserve.)
Working
- Called-up capital per share = Application ₹3 + Allotment ₹2 + First Call ₹3 = ₹8 (premium left out).
- Money received per share, excluding premium = Application ₹3 + Allotment ₹2 = ₹5.
- Premium called but not received = ₹0 per share.
- Share Capital A/c Dr = ₹8 × 100 = ₹800.
- Share Forfeiture A/c Cr = ₹5 × 100 = ₹500.
- Unpaid calls credited in full, premium included: First Call ₹300.
- Bank A/c Dr = 100 × ₹7 = ₹700.
- Share Capital A/c Cr = 100 × ₹10 paid up = ₹1,000.
- Discount on reissue = (₹10 − ₹7) × 100 = ₹300, debited to Share Forfeiture A/c.
- Forfeited amount on the reissued shares = ₹5 × 100 = ₹500.
- Transfer to Capital Reserve = ₹500 − ₹300 discount = ₹200.
- Balance left in Share Forfeiture A/c = ₹500 − ₹300 − ₹200 = ₹0.
Common mistakes in the exam
- Debiting Share Capital with the paid-up amount. Share Capital is debited with the called-up amount only, which leaves out premium.
- Debiting Securities Premium for premium that was received. Only premium that was called and not paid is debited.
- Moving the whole forfeited amount to Capital Reserve. Only the forfeiture on the reissued shares moves, after the discount.
- Letting the discount on reissue exceed the forfeited amount on those shares. The Share Forfeiture A/c would go into debit, so the calculator flags it.
What happens on forfeiture
A shareholder who does not pay a call loses the shares. The company takes them back and removes their called-up capital from Share Capital A/c. Money the shareholder did pay (excluding premium) goes to Share Forfeiture A/c. Calls that stay unpaid are no longer receivable, so each unpaid stage is credited with the amount that was due on it.
Why premium is treated differently
Premium is not part of the share capital. If the premium was received, it already sits in Securities Premium and stays there. If it was called but never paid, it is wiped out with a debit to Securities Premium A/c. That is why the premium line appears only when the premium was unpaid.
Booking the reissue
When the shares are reissued at less than their paid-up amount, the gap is a discount. It is debited to Share Forfeiture A/c, and the rest of the forfeited money on those shares is the amount that can go to Capital Reserve. When the new price is more than the paid-up amount, the extra is credited to Securities Premium A/c.
Pro-rata allotment
If the defaulter applied for more shares than were allotted, the extra application money was adjusted against allotment. The amount received on the forfeited shares then includes that extra money, and the allotment left unpaid is smaller. This calculator does not make that adjustment, so work out the money received and the unpaid allotment by hand for such questions.
Worked example: Example 1
100 shares of ₹10 each, with ₹8 called. Application ₹3 and allotment ₹2 were paid. The first call of ₹3 was not paid. Share Capital is debited ₹800. Share Forfeiture A/c is credited ₹500 (₹5 received per share). The first call account is credited ₹300. The shares are then reissued at ₹7 as fully paid. The discount is ₹3 × 100 = ₹300, which leaves ₹500 − ₹300 = ₹200 for Capital Reserve.
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Learning aid — check the method with your textbook and teacher.
By the ACES team · Last checked 6 November 2026