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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.?
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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
There are two events that need to be recorded in the books of the company - forfeiture of shares and re-issue of shares. The journal entries for both events are as follows:
Forfeiture of Shares:
- Debit Mr. P's Account (2,500 shares @ ₹70 each) - ₹1,75,000
- Credit Share Capital Account (2,500 shares @ ₹100 each) - ₹2,50,000
- Credit Calls in Arrears Account - ₹20,000
Explanation: Mr. P's shares were forfeited because he did not pay the allotment and first call money. The company debits Mr. P's account for the amount paid by him (₹70 per share) and credits the Share Capital account for the face value of the shares. The Calls in Arrears account is credited for the amount of call money that was not paid.
Re-issue of Shares:
- Debit Bank Account - ₹1,20,000
- Credit Share Capital Account (2,000 shares @ ₹100 each) - ₹2,00,000
- Credit Share Forfeiture Account - ₹20,000
Explanation: The company re-issued 2,000 shares to Mr. Q at ₹60 per share, paid-up as ₹70 per share. The bank account is debited for the amount received from Mr. Q. The Share Capital account is credited for the face value of the re-issued shares. The Share Forfeiture account is credited for the amount of share capital that was forfeited earlier.
Overall, the Share Capital account remains the same before and after the forfeiture and re-issue of shares, but there is a reduction in the number of shares outstanding due to the forfeiture.
There are two events that need to be recorded in the books of the company - forfeiture of shares and re-issue of shares. The journal entries for both events are as follows:
Forfeiture of Shares:
- Debit Mr. P's Account (2,500 shares @ ₹70 each) - ₹1,75,000
- Credit Share Capital Account (2,500 shares @ ₹100 each) - ₹2,50,000
- Credit Calls in Arrears Account - ₹20,000
Explanation: Mr. P's shares were forfeited because he did not pay the allotment and first call money. The company debits Mr. P's account for the amount paid by him (₹70 per share) and credits the Share Capital account for the face value of the shares. The Calls in Arrears account is credited for the amount of call money that was not paid.
Re-issue of Shares:
- Debit Bank Account - ₹1,20,000
- Credit Share Capital Account (2,000 shares @ ₹100 each) - ₹2,00,000
- Credit Share Forfeiture Account - ₹20,000
Explanation: The company re-issued 2,000 shares to Mr. Q at ₹60 per share, paid-up as ₹70 per share. The bank account is debited for the amount received from Mr. Q. The Share Capital account is credited for the face value of the re-issued shares. The Share Forfeiture account is credited for the amount of share capital that was forfeited earlier.
Overall, the Share Capital account remains the same before and after the forfeiture and re-issue of shares, but there is a reduction in the number of shares outstanding due to the forfeiture.
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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.?
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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.?.
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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
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