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Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on a pro rata basis.The amount payable was rs.2 on application,rs.5on allotment (including premium of rs.2 each,rs.3 on first call and rs.2 on final call.Vikash failed to pay the first nd final calls on his 300 shares.All the shares were forfeited out of them 200 shares were reissued @ rs.9 per share. Give the accounting treatment and also state the amount to be credited to capital reserve?
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Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on...
Accounting Treatment for Forfeiture and Reissue of Shares


When a shareholder fails to pay the calls on shares, the company can forfeit the shares and reissue them to new shareholders. The accounting treatment for forfeiture and reissue of shares is as follows:


Forfeiture of Shares



  • The shareholder's account is debited with the amount of calls not paid, including any interest or expenses incurred by the company.

  • The share capital account is credited with the nominal value of the forfeited shares.

  • The shares are treated as cancelled and no longer form part of the company's issued share capital.



Reissue of Shares



  • The forfeited shares are recorded as a liability in the company's balance sheet until they are reissued or cancelled.

  • The reissue price is credited to the share capital account, and any excess of the price over the nominal value of the shares is credited to a share premium account.

  • The forfeited shares are credited to a suspense account until they are reissued or cancelled.

  • When the forfeited shares are reissued, the suspense account is debited and the new shareholder's account is credited with the reissue price.



Amount to be Credited to Capital Reserve


The amount to be credited to capital reserve is the excess of the reissue price over the nominal value of the forfeited shares. In this case:



  • Nominal value of forfeited shares = 300 shares x Rs. 2 = Rs. 600

  • Reissue price of 200 shares = 200 shares x Rs. 9 = Rs. 1800

  • Excess of reissue price over nominal value = Rs. 1800 - Rs. 600 = Rs. 1200



Therefore, Rs. 1200 should be credited to capital reserve.
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Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on...
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Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on a pro rata basis.The amount payable was rs.2 on application,rs.5on allotment (including premium of rs.2 each,rs.3 on first call and rs.2 on final call.Vikash failed to pay the first nd final calls on his 300 shares.All the shares were forfeited out of them 200 shares were reissued @ rs.9 per share. Give the accounting treatment and also state the amount to be credited to capital reserve?
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Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on a pro rata basis.The amount payable was rs.2 on application,rs.5on allotment (including premium of rs.2 each,rs.3 on first call and rs.2 on final call.Vikash failed to pay the first nd final calls on his 300 shares.All the shares were forfeited out of them 200 shares were reissued @ rs.9 per share. Give the accounting treatment and also state the amount to be credited to capital reserve? 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 Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on a pro rata basis.The amount payable was rs.2 on application,rs.5on allotment (including premium of rs.2 each,rs.3 on first call and rs.2 on final call.Vikash failed to pay the first nd final calls on his 300 shares.All the shares were forfeited out of them 200 shares were reissued @ rs.9 per share. Give the accounting treatment and also state the amount to be credited to capital reserve? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Enjoy Ltd. had allotted 10000 shares to applicants for 14000 shared on a pro rata basis.The amount payable was rs.2 on application,rs.5on allotment (including premium of rs.2 each,rs.3 on first call and rs.2 on final call.Vikash failed to pay the first nd final calls on his 300 shares.All the shares were forfeited out of them 200 shares were reissued @ rs.9 per share. Give the accounting treatment and also state the amount to be credited to capital reserve?.
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