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4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company?
Most Upvoted Answer
4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100...
1) Share Capital A/c. Dr. 300000...To Share allotment A/c. 100000... To Share 1st call A/c. 100000... To share forfeiture A/c. 100000.
2) Bank A/c. Dr. 195000...Share forfeiture A/c. Dr. 30000...Share capital A/c. 225000.
3) Share forfeiture A/c. Dr. 45000...To capital reserve A/c. 45000.
2) Bank A/c. Dr. 195000...Share forfeiture A/c. Dr. 30000...Share capital A/c. 225000.
3) Share forfeiture A/c. Dr. 45000...To capital reserve A/c. 45000.
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4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100...
Journal Entries for Forfeiture and Re-issue of Shares
Forfeiture of Shares
---------------------
Debit: Share Forfeiture Account (4,000 x Rs. 75) Rs. 3,00,000
Credit: Preference Share Capital Account (4,000 x Rs. 100) Rs. 4,00,000
Credit: Share Allotment Account (4,000 x Rs. 25) Rs. 1,00,000
Credit: Share First Call Account (4,000 x Rs. 25) Rs. 1,00,000
Explanation:
- Share Forfeiture Account is debited to record the forfeiture of shares.
- Preference Share Capital Account is credited to reduce the share capital of the company.
- Share Allotment Account and Share First Call Account are credited to reverse the entries made at the time of allotment and first call.
Re-issue of Shares
-------------------
Debit: Bank Account (3,000 x Rs. 65) Rs. 1,95,000
Debit: Share Forfeiture Account (1,000 x Rs. 75) Rs. 75,000
Credit: Preference Share Capital Account (3,000 x Rs. 100) Rs. 3,00,000
Credit: Securities Premium Account (3,000 x Rs. 10) Rs. 30,000
Explanation:
- Bank Account is debited to record the receipt of money from the re-issue of shares.
- Share Forfeiture Account is debited to write off the forfeited amount on re-issue.
- Preference Share Capital Account is credited with the re-issue price of shares.
- Securities Premium Account is credited with the excess amount received over the face value of shares.
Note:
- The forfeiture amount of Rs. 75,000 (1,000 x Rs. 75) is written off as the company cannot receive it again.
- The re-issue price is Rs. 65 per share, which is lower than the face value of Rs. 100 per share. Therefore, no entry is made in the Share Forfeiture Account for the discount.
- The excess amount received on re-issue is credited to Securities Premium Account and not to Share Premium Account as preference shares do not have a share premium account.
Forfeiture of Shares
---------------------
Debit: Share Forfeiture Account (4,000 x Rs. 75) Rs. 3,00,000
Credit: Preference Share Capital Account (4,000 x Rs. 100) Rs. 4,00,000
Credit: Share Allotment Account (4,000 x Rs. 25) Rs. 1,00,000
Credit: Share First Call Account (4,000 x Rs. 25) Rs. 1,00,000
Explanation:
- Share Forfeiture Account is debited to record the forfeiture of shares.
- Preference Share Capital Account is credited to reduce the share capital of the company.
- Share Allotment Account and Share First Call Account are credited to reverse the entries made at the time of allotment and first call.
Re-issue of Shares
-------------------
Debit: Bank Account (3,000 x Rs. 65) Rs. 1,95,000
Debit: Share Forfeiture Account (1,000 x Rs. 75) Rs. 75,000
Credit: Preference Share Capital Account (3,000 x Rs. 100) Rs. 3,00,000
Credit: Securities Premium Account (3,000 x Rs. 10) Rs. 30,000
Explanation:
- Bank Account is debited to record the receipt of money from the re-issue of shares.
- Share Forfeiture Account is debited to write off the forfeited amount on re-issue.
- Preference Share Capital Account is credited with the re-issue price of shares.
- Securities Premium Account is credited with the excess amount received over the face value of shares.
Note:
- The forfeiture amount of Rs. 75,000 (1,000 x Rs. 75) is written off as the company cannot receive it again.
- The re-issue price is Rs. 65 per share, which is lower than the face value of Rs. 100 per share. Therefore, no entry is made in the Share Forfeiture Account for the discount.
- The excess amount received on re-issue is credited to Securities Premium Account and not to Share Premium Account as preference shares do not have a share premium account.
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4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company?
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4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company?.
4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company?.
Solutions for 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? in English & in Hindi are available as part of our courses for CA Foundation.
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4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company?, a detailed solution for 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? has been provided alongside types of 4 (A)Abhijeet who was the holder of 4,000 preference shares of Rs. 100 each, on which Rs. 75 per share has been called up could not pay his dues on Allotment and First call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at Rs. 65 per share paid-up as Rs.75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company? theory, EduRev gives you an
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