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Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve
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Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share b...
Forfeiture of Shares:
Forfeiture of shares refers to the cancellation of shares held by a shareholder due to non-payment of the required amount on those shares. When a shareholder fails to pay the call money on shares, the company has the right to forfeit those shares.
Journal Entries for Forfeiture of Shares:
1. To record the forfeiture of shares:
Share Capital A/c (Nominal A/c) Dr.
To Share Forfeiture A/c (Share Capital Forfeited A/c) (Being the shares forfeited)
2. To record the amount paid up on forfeited shares:
Share Forfeiture A/c (Share Capital Forfeited A/c) Dr.
To Share Allotment A/c (Nominal A/c) (Being the amount paid up on forfeited shares)
3. To record the reissue of forfeited shares:
Bank A/c (Asset A/c) Dr.
To Share Forfeiture A/c (Share Capital Forfeited A/c) (Being the reissue of forfeited shares)
Journal Entries for Reissue of Shares:
1. To record the receipt of application money on reissue of shares:
Bank A/c (Asset A/c) Dr.
To Share Application A/c (Nominal A/c) (Being the receipt of application money on reissue of shares)
2. To record the allotment of shares:
Share Allotment A/c (Nominal A/c) Dr.
To Share Capital A/c (Nominal A/c) (Being the allotment of shares)
3. To record the transfer of amount to Capital Reserve:
Share Forfeiture A/c (Share Capital Forfeited A/c) Dr.
To Capital Reserve A/c (Reserve and Surplus A/c) (Being the transfer of amount to Capital Reserve)
Explanation:
- In the given scenario, Ace Limited forfeited 200 shares of Rs. 10 each, which were issued at a discount of Rs. 1 per share. The amount called up on these shares was Rs. 8 per share, but the shareholder failed to pay the first call of Rs. 3 per share.
- To record the forfeiture of shares, we debit the Share Capital A/c and credit the Share Forfeiture A/c. This shows the cancellation of shares and the transfer of their value to the Share Forfeiture A/c.
- The amount paid up on forfeited shares is then transferred from the Share Forfeiture A/c to the Share Allotment A/c.
- Subsequently, the company reissued 160 shares at Rs. 5 per share, of which Rs. 8 was paid up. To record the reissue of shares, we debit the Bank A/c and credit the Share Forfeiture A/c. This shows the receipt of money from the reissue of forfeited shares.
- The application money received on the reissue of shares is then recorded by debiting the Bank A/c and crediting the Share Application A/c.
- The allotment of shares is recorded by debiting the Share Allotment A/c and crediting the Share Capital A/c.
- Finally, the amount transferred to the Capital Reserve is recorded by debiting the Share Forfeiture A/c and crediting the Capital
Forfeiture of shares refers to the cancellation of shares held by a shareholder due to non-payment of the required amount on those shares. When a shareholder fails to pay the call money on shares, the company has the right to forfeit those shares.
Journal Entries for Forfeiture of Shares:
1. To record the forfeiture of shares:
Share Capital A/c (Nominal A/c) Dr.
To Share Forfeiture A/c (Share Capital Forfeited A/c) (Being the shares forfeited)
2. To record the amount paid up on forfeited shares:
Share Forfeiture A/c (Share Capital Forfeited A/c) Dr.
To Share Allotment A/c (Nominal A/c) (Being the amount paid up on forfeited shares)
3. To record the reissue of forfeited shares:
Bank A/c (Asset A/c) Dr.
To Share Forfeiture A/c (Share Capital Forfeited A/c) (Being the reissue of forfeited shares)
Journal Entries for Reissue of Shares:
1. To record the receipt of application money on reissue of shares:
Bank A/c (Asset A/c) Dr.
To Share Application A/c (Nominal A/c) (Being the receipt of application money on reissue of shares)
2. To record the allotment of shares:
Share Allotment A/c (Nominal A/c) Dr.
To Share Capital A/c (Nominal A/c) (Being the allotment of shares)
3. To record the transfer of amount to Capital Reserve:
Share Forfeiture A/c (Share Capital Forfeited A/c) Dr.
To Capital Reserve A/c (Reserve and Surplus A/c) (Being the transfer of amount to Capital Reserve)
Explanation:
- In the given scenario, Ace Limited forfeited 200 shares of Rs. 10 each, which were issued at a discount of Rs. 1 per share. The amount called up on these shares was Rs. 8 per share, but the shareholder failed to pay the first call of Rs. 3 per share.
- To record the forfeiture of shares, we debit the Share Capital A/c and credit the Share Forfeiture A/c. This shows the cancellation of shares and the transfer of their value to the Share Forfeiture A/c.
- The amount paid up on forfeited shares is then transferred from the Share Forfeiture A/c to the Share Allotment A/c.
- Subsequently, the company reissued 160 shares at Rs. 5 per share, of which Rs. 8 was paid up. To record the reissue of shares, we debit the Bank A/c and credit the Share Forfeiture A/c. This shows the receipt of money from the reissue of forfeited shares.
- The application money received on the reissue of shares is then recorded by debiting the Bank A/c and crediting the Share Application A/c.
- The allotment of shares is recorded by debiting the Share Allotment A/c and crediting the Share Capital A/c.
- Finally, the amount transferred to the Capital Reserve is recorded by debiting the Share Forfeiture A/c and crediting the Capital
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Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - Class 12, Accountancy?
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Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - 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 Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - Class 12, Accountancy? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - Class 12, Accountancy?.
Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - 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 Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - Class 12, Accountancy? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ace Limited forfeited 200 share of rupees 10 each rupees 8 per share being called up which were issued at a discount of rd1 Persia for non payment of first called of rupees 3 Persia of this forfeited shares 160 spare word issued subsequently by the company at rupees 5 as rupees 8 paid up Persia give the journal entries for the for features and reissue of shares including the amount transfer to Capital Reserve Related: Forfeiture of Share (part 6 ) - Class 12, Accountancy?.
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