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B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue?
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B's 100 forfeited equity shares of 100each for non-payment of first an...
Journal Entries for Forfeiture and Reissue of Equity Shares
Forfeiture of Equity Shares:
The forfeiture of equity shares occurs when a shareholder fails to pay the outstanding amount of the shares. In the given case, B failed to pay the first and final call of 50 on 100 equity shares of 100 each. Therefore, B's shares are forfeited by the company. The journal entry for forfeiture of shares is as follows:
Dr. Share Forfeiture Account (100 shares * 100) 10,000
Cr. Share Capital Account (100 shares * 100) 10,000
Reissue of Equity Shares:
The reissue of forfeited shares is the issuance of the forfeited shares to a new shareholder. In the given case, the forfeited shares of B are reissued to C for 70 per share, fully paid. The journal entry for the reissue of shares is as follows:
Dr. Bank Account (100 shares * 70) 7,000
Dr. Share Forfeiture Account (100 shares * 30) 3,000
Cr. Share Capital Account (100 shares * 100) 10,000
Explanation:
- The first journal entry records the forfeiture of B's 100 shares of 100 each. The Share Forfeiture Account is debited for the nominal value of the shares forfeited, and the Share Capital Account is credited for the same amount.
- The second journal entry records the reissue of B's forfeited shares to C. The Bank Account is debited for the amount received from the sale of shares to C, and the Share Forfeiture Account is debited for the amount of discount granted on the reissue of shares. The Share Capital Account is credited for the nominal value of the shares forfeited.
Forfeiture of Equity Shares:
The forfeiture of equity shares occurs when a shareholder fails to pay the outstanding amount of the shares. In the given case, B failed to pay the first and final call of 50 on 100 equity shares of 100 each. Therefore, B's shares are forfeited by the company. The journal entry for forfeiture of shares is as follows:
Dr. Share Forfeiture Account (100 shares * 100) 10,000
Cr. Share Capital Account (100 shares * 100) 10,000
Reissue of Equity Shares:
The reissue of forfeited shares is the issuance of the forfeited shares to a new shareholder. In the given case, the forfeited shares of B are reissued to C for 70 per share, fully paid. The journal entry for the reissue of shares is as follows:
Dr. Bank Account (100 shares * 70) 7,000
Dr. Share Forfeiture Account (100 shares * 30) 3,000
Cr. Share Capital Account (100 shares * 100) 10,000
Explanation:
- The first journal entry records the forfeiture of B's 100 shares of 100 each. The Share Forfeiture Account is debited for the nominal value of the shares forfeited, and the Share Capital Account is credited for the same amount.
- The second journal entry records the reissue of B's forfeited shares to C. The Bank Account is debited for the amount received from the sale of shares to C, and the Share Forfeiture Account is debited for the amount of discount granted on the reissue of shares. The Share Capital Account is credited for the nominal value of the shares forfeited.
Community Answer
B's 100 forfeited equity shares of 100each for non-payment of first an...
1. Equity share capital A/c Dr 10,000
To Equity share forfeiture A/c 5,000
To calls in arrear A/c 5,000
(being 100 equity shares forfeited @ ₹100 each
due to non payment of first and final call)
2. Bank A/c Dr 7,000
Equity share forfeiture A/c Dr 3,000
To Equity share capital A/c 10,000
( being forfeited shares re-issued @ of ₹ 70 each
and remaining amount adjust with equity share
forfeiture A/c)
3. Equity share forfeiture A/c Dr 2,000
To Capital Reserve A/c 2,000
To Equity share forfeiture A/c 5,000
To calls in arrear A/c 5,000
(being 100 equity shares forfeited @ ₹100 each
due to non payment of first and final call)
2. Bank A/c Dr 7,000
Equity share forfeiture A/c Dr 3,000
To Equity share capital A/c 10,000
( being forfeited shares re-issued @ of ₹ 70 each
and remaining amount adjust with equity share
forfeiture A/c)
3. Equity share forfeiture A/c Dr 2,000
To Capital Reserve A/c 2,000
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B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue?
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B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue? 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 B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue?.
B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue? 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 B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for B's 100 forfeited equity shares of 100each for non-payment of first and final call of 50 are reissued to c for 70 per share fully paid give the journal entries for recording forfeiture and reissue?.
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