CA Foundation Exam > CA Foundation Questions > Mr. P who was the holder of 2,500 preference ...
Start Learning for Free
Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.?
Most Upvoted Answer
Mr. P who was the holder of 2,500 preference shares of 100 each, on wh...
Journal Entries for Forfeiture and Re-issue of Shares
1. Forfeiture of Shares
When Mr. P could not pay his dues on allotment and first call, the directors forfeited his shares.
The journal entry for forfeiture of shares will be:
Forfeiture A/c Dr. 1,75,000
Share Capital (Preference) A/c Cr. 1,75,000
Explanation:
- Forfeiture A/c is a nominal account and hence debited as per the rule of nominal account.
- Share Capital (Preference) A/c is a capital account and hence credited as per the rule of capital account.
- The amount of ₹ 1,75,000 is calculated as follows:
- Number of shares forfeited = 2,500
- Amount called-up per share = ₹ 70
- Amount paid on each share = ₹ 20 + ₹ 20 = ₹ 40
- Amount due on each share = ₹ 70 - ₹ 40 = ₹ 30
- Total amount due on 2,500 shares = ₹ 30 x 2,500 = ₹ 75,000
- Forfeiture amount (usually 1/2 of the amount due) = ₹ 75,000 x 1/2 = ₹ 37,500
- Total forfeiture amount = ₹ 37,500 x 2 = ₹ 75,000
- The forfeiture amount is credited to Share Capital (Preference) A/c.
2. Re-issue of Forfeited Shares
The directors reissued 2,000 of the forfeited shares to Mr. Q at ₹ 60 per share paid-up as 70 per share.
The journal entry for re-issue of shares will be:
Bank A/c Dr. 1,20,000
Share Capital (Preference) A/c Cr. 1,40,000
Forfeited Shares A/c Cr. 20,000
Explanation:
- Bank A/c is a real account and hence debited as per the rule of real account.
- Share Capital (Preference) A/c is a capital account and hence credited as per the rule of capital account.
- Forfeited Shares A/c is a nominal account and hence credited as per the rule of nominal account.
- The amount of ₹ 1,20,000 is calculated as follows:
- Number of shares reissued = 2,000
- Re-issue price per share = ₹ 60
- Paid-up value per share = ₹ 70
- Amount received from Mr. Q = ₹ 60 x 2,000 = ₹ 1,20,000
- The amount of ₹ 1,40,000 is the face value of 2,000 shares reissued (i.e., 2,000 x ₹ 70).
- The amount of ₹ 20,000 is the excess of face value over re-issue price (i.e., ₹ 70 - ₹ 60 = ₹ 10 per share x 2,000 shares). This amount is credited to Forfeited Shares A/c.
1. Forfeiture of Shares
When Mr. P could not pay his dues on allotment and first call, the directors forfeited his shares.
The journal entry for forfeiture of shares will be:
Forfeiture A/c Dr. 1,75,000
Share Capital (Preference) A/c Cr. 1,75,000
Explanation:
- Forfeiture A/c is a nominal account and hence debited as per the rule of nominal account.
- Share Capital (Preference) A/c is a capital account and hence credited as per the rule of capital account.
- The amount of ₹ 1,75,000 is calculated as follows:
- Number of shares forfeited = 2,500
- Amount called-up per share = ₹ 70
- Amount paid on each share = ₹ 20 + ₹ 20 = ₹ 40
- Amount due on each share = ₹ 70 - ₹ 40 = ₹ 30
- Total amount due on 2,500 shares = ₹ 30 x 2,500 = ₹ 75,000
- Forfeiture amount (usually 1/2 of the amount due) = ₹ 75,000 x 1/2 = ₹ 37,500
- Total forfeiture amount = ₹ 37,500 x 2 = ₹ 75,000
- The forfeiture amount is credited to Share Capital (Preference) A/c.
2. Re-issue of Forfeited Shares
The directors reissued 2,000 of the forfeited shares to Mr. Q at ₹ 60 per share paid-up as 70 per share.
The journal entry for re-issue of shares will be:
Bank A/c Dr. 1,20,000
Share Capital (Preference) A/c Cr. 1,40,000
Forfeited Shares A/c Cr. 20,000
Explanation:
- Bank A/c is a real account and hence debited as per the rule of real account.
- Share Capital (Preference) A/c is a capital account and hence credited as per the rule of capital account.
- Forfeited Shares A/c is a nominal account and hence credited as per the rule of nominal account.
- The amount of ₹ 1,20,000 is calculated as follows:
- Number of shares reissued = 2,000
- Re-issue price per share = ₹ 60
- Paid-up value per share = ₹ 70
- Amount received from Mr. Q = ₹ 60 x 2,000 = ₹ 1,20,000
- The amount of ₹ 1,40,000 is the face value of 2,000 shares reissued (i.e., 2,000 x ₹ 70).
- The amount of ₹ 20,000 is the excess of face value over re-issue price (i.e., ₹ 70 - ₹ 60 = ₹ 10 per share x 2,000 shares). This amount is credited to Forfeited Shares A/c.
Community Answer
Mr. P who was the holder of 2,500 preference shares of 100 each, on wh...
Mr. P who was the holder of 2,500 preference shares of Rs.100 each, on which Rs.70 per share has been called up could
not pay his dues on Allotment and First call each at Rs.20 per share. The Directors forfeited the above shares and
reissued 2,000 of such shares to Mr. Q at Rs.60 per share paid-up as Rs. 70 per share. You are required to prepare the
Journal Entries to record the above for feiture and re-issue in the books of the company.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.?
Question Description
Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.?.
Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.?.
Solutions for Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? defined & explained in the simplest way possible. Besides giving the explanation of
Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.?, a detailed solution for Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? has been provided alongside types of Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? theory, EduRev gives you an
ample number of questions to practice Mr. P who was the holder of 2,500 preference shares of 100 each, on which ₹ 70 per share has been called up could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the above shares and reissued 2,000 of such shares to Mr. Q at ₹ 60 per share paid-up as 70 per share. You are required to prepare the Journal Entries to record the above forfeiture and re-issue in the books of the company.? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup