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sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares
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sonal was holding 50 equity shares at Rs 20 each of bittu limited issu...
Share capital ac dr
share forfiture Ac dr
to share first and final call ac
share forfiture Ac dr
to share first and final call ac
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sonal was holding 50 equity shares at Rs 20 each of bittu limited issu...
Journal Entries for Forfeiture of Shares:
When a shareholder fails to pay the required amount on the calls made by the company, the shares are forfeited. The forfeiture of shares requires specific journal entries to be made. Let's look at the journal entries for the forfeiture of Sonal's shares in Bittu Limited.
1. Forfeiture of shares:
When the shares are forfeited, the following journal entry is made:
Share Capital Account (Nominal Account) Dr.
To Share Allotment Account (Nominal Account)
To Calls in Arrears Account (Nominal Account)
In this case, the entry will be:
Share Capital Account Dr. - 1,000 (50 shares x Rs 20 each)
To Share Allotment Account - 300 (50 shares x Rs 6 on allotment)
To Calls in Arrears Account - 200 (50 shares x Rs 4 due on first call)
The Share Capital Account is reduced by the value of shares forfeited, and the Share Allotment Account and Calls in Arrears Account are debited to adjust the unpaid amounts.
2. Forfeiture of unpaid amount:
When the shareholder fails to pay the final call amount, the following journal entry is made:
Calls in Arrears Account (Nominal Account) Dr.
To Share Capital Forfeiture Account (Nominal Account)
In this case, the entry will be:
Calls in Arrears Account Dr. - 200 (50 shares x Rs 4 due on first call)
To Share Capital Forfeiture Account - 200 (50 shares x Rs 4 due on first call)
The Calls in Arrears Account is debited, and the Share Capital Forfeiture Account is credited with the unpaid amount.
3. Reissue of forfeited shares:
If the forfeited shares are reissued, the following journal entry is made:
Bank Account (Real Account) Dr.
To Share Capital Account (Nominal Account)
To Share Capital Forfeiture Account (Nominal Account)
In this case, the entry will be:
Bank Account Dr. - 900 (45 shares x Rs 20 each)
To Share Capital Account - 800 (40 shares x Rs 20 each)
To Share Capital Forfeiture Account - 100 (5 shares x Rs 20 each)
The Bank Account is debited with the amount received from the reissue of shares, and the Share Capital Account is credited with the nominal value of the reissued shares. The Share Capital Forfeiture Account is also credited with the excess amount received over the forfeited shares' nominal value.
Conclusion:
By making the above journal entries, the forfeiture of Sonal's shares in Bittu Limited can be recorded accurately. It is important to maintain proper records and follow the accounting principles while dealing with the forfeiture of shares.
When a shareholder fails to pay the required amount on the calls made by the company, the shares are forfeited. The forfeiture of shares requires specific journal entries to be made. Let's look at the journal entries for the forfeiture of Sonal's shares in Bittu Limited.
1. Forfeiture of shares:
When the shares are forfeited, the following journal entry is made:
Share Capital Account (Nominal Account) Dr.
To Share Allotment Account (Nominal Account)
To Calls in Arrears Account (Nominal Account)
In this case, the entry will be:
Share Capital Account Dr. - 1,000 (50 shares x Rs 20 each)
To Share Allotment Account - 300 (50 shares x Rs 6 on allotment)
To Calls in Arrears Account - 200 (50 shares x Rs 4 due on first call)
The Share Capital Account is reduced by the value of shares forfeited, and the Share Allotment Account and Calls in Arrears Account are debited to adjust the unpaid amounts.
2. Forfeiture of unpaid amount:
When the shareholder fails to pay the final call amount, the following journal entry is made:
Calls in Arrears Account (Nominal Account) Dr.
To Share Capital Forfeiture Account (Nominal Account)
In this case, the entry will be:
Calls in Arrears Account Dr. - 200 (50 shares x Rs 4 due on first call)
To Share Capital Forfeiture Account - 200 (50 shares x Rs 4 due on first call)
The Calls in Arrears Account is debited, and the Share Capital Forfeiture Account is credited with the unpaid amount.
3. Reissue of forfeited shares:
If the forfeited shares are reissued, the following journal entry is made:
Bank Account (Real Account) Dr.
To Share Capital Account (Nominal Account)
To Share Capital Forfeiture Account (Nominal Account)
In this case, the entry will be:
Bank Account Dr. - 900 (45 shares x Rs 20 each)
To Share Capital Account - 800 (40 shares x Rs 20 each)
To Share Capital Forfeiture Account - 100 (5 shares x Rs 20 each)
The Bank Account is debited with the amount received from the reissue of shares, and the Share Capital Account is credited with the nominal value of the reissued shares. The Share Capital Forfeiture Account is also credited with the excess amount received over the forfeited shares' nominal value.
Conclusion:
By making the above journal entries, the forfeiture of Sonal's shares in Bittu Limited can be recorded accurately. It is important to maintain proper records and follow the accounting principles while dealing with the forfeiture of shares.
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sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy?
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sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy?.
sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for sonal was holding 50 equity shares at Rs 20 each of bittu limited issued at 10 percent premium she paid 6 on application 6 on allotment but could not pay the Rs 5 on first call and 5 on final call her shares were forfeited make journal entries for forfeiture of shares Related: Issue and Forfeiture of Shares:Summary - Class 12, Accountancy?.
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