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A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares?
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A company issued shares of ₹10 each at 10% premium payable₹2 on applic...
Share capital a/c. Dr. (50×6). 300
premium on share. Dr. (50×1). 50
To share forefeiture. cr. (50 ×2). 100
To share allotment. cr. ( 50× 3). 150
To share first call. cr. ( 50×2). 100
share capital. a/c. (30× 6) 180
to Share forefeiture. cr. ( 30× 4) 120
To share first call cr. ( 30×2) 60
Note- we assume company forefeit shares after first call .
premium on share. Dr. (50×1). 50
To share forefeiture. cr. (50 ×2). 100
To share allotment. cr. ( 50× 3). 150
To share first call. cr. ( 50×2). 100
share capital. a/c. (30× 6) 180
to Share forefeiture. cr. ( 30× 4) 120
To share first call cr. ( 30×2) 60
Note- we assume company forefeit shares after first call .
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A company issued shares of ₹10 each at 10% premium payable₹2 on applic...
Journal Entries for Forfeiture of Shares
The forfeiture of shares refers to the cancellation of shares that have not been fully paid for by the shareholder. When a shareholder fails to pay the call amount due on the shares, the company has the right to forfeit or cancel the shares. The forfeiture of shares is recorded in the books of accounts through the following journal entries:
1. Forfeiture of Shares
When the shares are forfeited, the shareholder's account is debited with the amount already paid and credited with the nominal value of the shares forfeited. The entry is:
Shareholder's Account Dr. (Nominal value of shares forfeited)
To Share Forfeiture Account Cr. (Amount already paid on shares)
2. Share Forfeiture Account
Share forfeiture account is a nominal account, and it is debited with the nominal value of forfeited shares and credited with the amount already paid on shares. The entry is:
Share Forfeiture Account Dr. (Nominal value of shares forfeited)
To Share Capital Account Cr. (Amount already paid on shares)
3. Share Capital Account
Share capital account is a nominal account, and it is credited with the nominal value of forfeited shares. The entry is:
Share Capital Account Dr. (Nominal value of shares forfeited)
To Share Forfeiture Account Cr. (Nominal value of shares forfeited)
Explanation
In the given scenario, 'A' was holding 50 shares, and he failed to pay his allotment and first call amount due on the shares. Therefore, the company forfeited his shares. The nominal value of each share is ₹10, and the amount already paid on each share is ₹5 (₹2 on application and ₹3 on allotment). Therefore, the entry for the forfeiture of 'A's shares will be:
Shareholder's Account Dr. 500 (50 shares x ₹10)
To Share Forfeiture Account Cr. 250 (50 shares x ₹5)
Similarly, 'B' was holding 30 shares, and he failed to pay his first call amount due on the shares. Therefore, the company forfeited his shares. The amount already paid on each share is ₹7 (₹2 on application, ₹3 on allotment, and ₹2 on first call). Therefore, the entry for the forfeiture of 'B's shares will be:
Shareholder's Account Dr. 300 (30 shares x ₹10)
To Share Forfeiture Account Cr. 210 (30 shares x ₹7)
The Share forfeiture account will be debited with ₹800 (₹500 for 'A' and ₹300 for 'B'), and the Share Capital account will be credited with ₹800 (₹500 for 'A' and ₹300 for 'B').
The forfeiture of shares refers to the cancellation of shares that have not been fully paid for by the shareholder. When a shareholder fails to pay the call amount due on the shares, the company has the right to forfeit or cancel the shares. The forfeiture of shares is recorded in the books of accounts through the following journal entries:
1. Forfeiture of Shares
When the shares are forfeited, the shareholder's account is debited with the amount already paid and credited with the nominal value of the shares forfeited. The entry is:
Shareholder's Account Dr. (Nominal value of shares forfeited)
To Share Forfeiture Account Cr. (Amount already paid on shares)
2. Share Forfeiture Account
Share forfeiture account is a nominal account, and it is debited with the nominal value of forfeited shares and credited with the amount already paid on shares. The entry is:
Share Forfeiture Account Dr. (Nominal value of shares forfeited)
To Share Capital Account Cr. (Amount already paid on shares)
3. Share Capital Account
Share capital account is a nominal account, and it is credited with the nominal value of forfeited shares. The entry is:
Share Capital Account Dr. (Nominal value of shares forfeited)
To Share Forfeiture Account Cr. (Nominal value of shares forfeited)
Explanation
In the given scenario, 'A' was holding 50 shares, and he failed to pay his allotment and first call amount due on the shares. Therefore, the company forfeited his shares. The nominal value of each share is ₹10, and the amount already paid on each share is ₹5 (₹2 on application and ₹3 on allotment). Therefore, the entry for the forfeiture of 'A's shares will be:
Shareholder's Account Dr. 500 (50 shares x ₹10)
To Share Forfeiture Account Cr. 250 (50 shares x ₹5)
Similarly, 'B' was holding 30 shares, and he failed to pay his first call amount due on the shares. Therefore, the company forfeited his shares. The amount already paid on each share is ₹7 (₹2 on application, ₹3 on allotment, and ₹2 on first call). Therefore, the entry for the forfeiture of 'B's shares will be:
Shareholder's Account Dr. 300 (30 shares x ₹10)
To Share Forfeiture Account Cr. 210 (30 shares x ₹7)
The Share forfeiture account will be debited with ₹800 (₹500 for 'A' and ₹300 for 'B'), and the Share Capital account will be credited with ₹800 (₹500 for 'A' and ₹300 for 'B').
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A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares?
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A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares?.
A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares?.
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A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares?, a detailed solution for A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares? has been provided alongside types of A company issued shares of ₹10 each at 10% premium payable₹2 on application; ₹3 on allotment including premium;₹2 on first call and ₹4 on final call. 'A' who was holding 50 shares failed to pay his allotment and first call and his shares were forfeited. 'B' who was holding 30 shares did not pay his first call and his shares were also forfeited. Give journal entries for forfeiture of shares? theory, EduRev gives you an
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