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X let , company forfeited 800 shares of Rs 10 each issued at per for non payment of 1st call Rs 2 and final call Rs 3 each. Out of these , 500 shares are reissued at 10% discount. Give journal entries in the books of the company?
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Journal Entries for Forfeiture and Reissue of Shares

Forfeiture of Shares

When a shareholder fails to pay the call money on shares, the company has the right to forfeit those shares. The journal entries for forfeiture of shares are as follows:

1. For recording the issue of shares:
(Debit) Bank Account - Number of shares * Call money per share
(Credit) Share Capital Account - Number of shares * Face value per share
(Credit) Calls in Arrears Account - Number of shares * (Call money per share - Amount paid)

2. For recording the forfeiture of shares:
(Debit) Share Forfeited Account - Number of shares * (Face value per share - Amount paid)
(Credit) Share Capital Account - Number of shares * Face value per share
(Credit) Calls in Arrears Account - Number of shares * (Call money per share - Amount paid)

Reissue of Shares

The forfeited shares can be reissued by the company at a discount or at a premium. The journal entries for reissue of shares at a discount are as follows:

1. For recording the reissue of forfeited shares:
(Debit) Bank Account - Number of shares * Reissue price per share
(Debit) Share Forfeited Account - Number of shares * (Face value per share - Reissue price per share)
(Credit) Share Capital Account - Number of shares * Face value per share
(Credit) Share Premium Account - Difference between the amount received and the share capital

Note: The share premium account is credited only when the reissue price is more than the forfeited price.

2. For recording the discount on reissue:
(Debit) Share Capital Account - Number of shares * Discount on reissue
(Credit) Share Premium Account - Number of shares * Discount on reissue

Note: The discount on reissue is calculated as the difference between the forfeited price and the reissue price.

In this case, the journal entries for forfeiture and reissue of shares are as follows:

Forfeiture of Shares:
(Debit) Bank Account - 8000 (800 shares * 10)
(Credit) Share Capital Account - 8000 (800 shares * 10)
(Credit) Calls in Arrears Account - 1600 [(800 shares * (2-0)]

(Debit) Share Forfeited Account - 4000 (800 shares * (10-2))
(Credit) Share Capital Account - 4000 (800 shares * 10)
(Credit) Calls in Arrears Account - 1600 [(800 shares * (2-0)]

Reissue of Shares:
(Debit) Bank Account - 4000 (500 shares * 8)
(Debit) Share Forfeited Account - 2000 (500 shares * (10-8))
(Credit) Share Capital Account - 5000 (500 shares * 10)
(Credit) Share Premium Account - 500 (500 shares * (10-8))

Discount on Reissue:
(Debit) Share Capital Account - 500 (500 shares * 1)
(Credit) Share Premium Account - 500 (500 shares * 1)

Therefore, the company has forfeited 800 shares and reissued 500 shares at a discount of 10%. The journal entries have been made accordingly.
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X let , company forfeited 800 shares of Rs 10 each issued at per for non payment of 1st call Rs 2 and final call Rs 3 each. Out of these , 500 shares are reissued at 10% discount. Give journal entries in the books of the company?
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X let , company forfeited 800 shares of Rs 10 each issued at per for non payment of 1st call Rs 2 and final call Rs 3 each. Out of these , 500 shares are reissued at 10% discount. Give journal entries in the books of the company? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about X let , company forfeited 800 shares of Rs 10 each issued at per for non payment of 1st call Rs 2 and final call Rs 3 each. Out of these , 500 shares are reissued at 10% discount. Give journal entries in the books of the company? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X let , company forfeited 800 shares of Rs 10 each issued at per for non payment of 1st call Rs 2 and final call Rs 3 each. Out of these , 500 shares are reissued at 10% discount. Give journal entries in the books of the company?.
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