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The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries?
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The director of a company for forfieted 4000 share of 100 each. Rupees...
Journal Entries for Forfeiture and Reissue of Shares
Forfeiture of Shares
When a shareholder fails to pay the final call amount on the shares, the company has the right to forfeit the shares. The forfeiture of shares is recorded in the books of accounts through the following journal entry:
Debit: Share Forfeiture Account (4000 shares x Rs. 100)
Credit: Share Capital Account (4000 shares x Rs. 100)
Credit: Calls in Arrears Account (4000 shares x Rs. 25)
Reissue of Shares
After the forfeiture of shares, the company can reissue the forfeited shares to new investors. The reissue of shares is recorded in the books of accounts through the following journal entry:
Debit: Bank Account (2000 shares x Rs. 60)
Debit: Share Forfeiture Account (4000 shares x Rs. 40)
Credit: Share Capital Account (2000 shares x Rs. 100)
Credit: Securities Premium Account (2000 shares x Rs. 20)
Explanation
In this case, the director of the company forfeited 4000 shares of Rs. 100 each for non-payment of the final call amount of Rs. 25. The total amount forfeited is Rs. 4,00,000 (4000 shares x Rs. 100).
The journal entry for the forfeiture of shares is as follows:
Debit: Share Forfeiture Account - Rs. 4,00,000
Credit: Share Capital Account - Rs. 4,00,000
Credit: Calls in Arrears Account - Rs. 1,00,000 (4000 shares x Rs. 25)
After the forfeiture of shares, the company reissued 2000 shares at a fully paid-up value of Rs. 60 per share. The total amount received from the reissue of shares is Rs. 1,20,000 (2000 shares x Rs. 60).
The journal entry for the reissue of shares is as follows:
Debit: Bank Account - Rs. 1,20,000
Debit: Share Forfeiture Account - Rs. 1,60,000 (4000 shares x Rs. 40)
Credit: Share Capital Account - Rs. 2,00,000 (2000 shares x Rs. 100)
Credit: Securities Premium Account - Rs. 40,000 (2000 shares x Rs. 20)
The share forfeiture account is debited with the difference between the face value of the forfeited shares and the reissue price of the shares (i.e. Rs. 40 per share) to account for the loss incurred by the company due to the forfeiture. The securities premium account is credited with the excess amount received on the reissue of shares over their face value (i.e. Rs. 20 per share).
Forfeiture of Shares
When a shareholder fails to pay the final call amount on the shares, the company has the right to forfeit the shares. The forfeiture of shares is recorded in the books of accounts through the following journal entry:
Debit: Share Forfeiture Account (4000 shares x Rs. 100)
Credit: Share Capital Account (4000 shares x Rs. 100)
Credit: Calls in Arrears Account (4000 shares x Rs. 25)
Reissue of Shares
After the forfeiture of shares, the company can reissue the forfeited shares to new investors. The reissue of shares is recorded in the books of accounts through the following journal entry:
Debit: Bank Account (2000 shares x Rs. 60)
Debit: Share Forfeiture Account (4000 shares x Rs. 40)
Credit: Share Capital Account (2000 shares x Rs. 100)
Credit: Securities Premium Account (2000 shares x Rs. 20)
Explanation
In this case, the director of the company forfeited 4000 shares of Rs. 100 each for non-payment of the final call amount of Rs. 25. The total amount forfeited is Rs. 4,00,000 (4000 shares x Rs. 100).
The journal entry for the forfeiture of shares is as follows:
Debit: Share Forfeiture Account - Rs. 4,00,000
Credit: Share Capital Account - Rs. 4,00,000
Credit: Calls in Arrears Account - Rs. 1,00,000 (4000 shares x Rs. 25)
After the forfeiture of shares, the company reissued 2000 shares at a fully paid-up value of Rs. 60 per share. The total amount received from the reissue of shares is Rs. 1,20,000 (2000 shares x Rs. 60).
The journal entry for the reissue of shares is as follows:
Debit: Bank Account - Rs. 1,20,000
Debit: Share Forfeiture Account - Rs. 1,60,000 (4000 shares x Rs. 40)
Credit: Share Capital Account - Rs. 2,00,000 (2000 shares x Rs. 100)
Credit: Securities Premium Account - Rs. 40,000 (2000 shares x Rs. 20)
The share forfeiture account is debited with the difference between the face value of the forfeited shares and the reissue price of the shares (i.e. Rs. 40 per share) to account for the loss incurred by the company due to the forfeiture. The securities premium account is credited with the excess amount received on the reissue of shares over their face value (i.e. Rs. 20 per share).
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The director of a company for forfieted 4000 share of 100 each. Rupees...
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The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries?
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The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries?.
The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The director of a company for forfieted 4000 share of 100 each. Rupees 75 paid up for non payment of the final call rupees 25. Subsequently 2000, shares were re issued at fully paid up for rupees 60 per share. Pass journal entries?.
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