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Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company.?
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Mr. who was the holder of 4,000 preference shares of ` 100 each, on wh...
Journal Entries for Forfeiture and Re-Issue of Preference Shares
Forfeiture of Shares
When a shareholder fails to pay the due amount on allotment or call, the company has the right to forfeit the shares. Forfeiture means cancellation of shares and extinguishment of all rights and interests of the shareholder in those shares. The company then reissues the forfeited shares to new shareholders. The journal entries for forfeiture and re-issue of preference shares are as follows:
Date: Allotment and First Call Due Date
Particulars | Debit | Credit
--- | --- | ---
Preference Share Capital A/c | ` 4,00,000 |
Share Allotment A/c | ` 1,00,000 |
Calls in Arrears A/c | ` 75,000 |
To Shareholder's A/c | ` 5,75,000 |
(Being the amount due on allotment and first call)
Date: Allotment and First Call Due Date
Particulars | Debit | Credit
--- | --- | ---
Calls in Arrears A/c | ` 75,000 |
Share Forfeiture A/c | ` 3,25,000 |
To Shareholder's A/c | ` 4,00,000 |
(Being the forfeiture of shares due to non-payment of allotment and first call)
Re-Issue of Shares
After forfeiture, the company can reissue the shares to new shareholders. The re-issue price should not be less than the amount already paid-up on those shares. The journal entries for re-issue of forfeited shares are as follows:
Date: Re-Issue of Shares
Particulars | Debit | Credit
--- | --- | ---
Bank A/c | ` 1,95,000 |
Share Forfeiture A/c | ` 65,000 |
Securities Premium Reserve A/c | ` 45,000 |
To Preference Share Capital A/c | ` 1,00,000 |
To Share Premium A/c | ` 75,000 |
(Being the re-issue of 3,000 preference shares at ` 65 per share, paid-up as ` 75 per share)
Conclusion
Forfeiture and re-issue of shares are important transactions in the life of a company. The journal entries for these transactions must be recorded properly to maintain accurate books of accounts. It is important to follow the legal requirements and accounting standards while recording these transactions.
Forfeiture of Shares
When a shareholder fails to pay the due amount on allotment or call, the company has the right to forfeit the shares. Forfeiture means cancellation of shares and extinguishment of all rights and interests of the shareholder in those shares. The company then reissues the forfeited shares to new shareholders. The journal entries for forfeiture and re-issue of preference shares are as follows:
Date: Allotment and First Call Due Date
Particulars | Debit | Credit
--- | --- | ---
Preference Share Capital A/c | ` 4,00,000 |
Share Allotment A/c | ` 1,00,000 |
Calls in Arrears A/c | ` 75,000 |
To Shareholder's A/c | ` 5,75,000 |
(Being the amount due on allotment and first call)
Date: Allotment and First Call Due Date
Particulars | Debit | Credit
--- | --- | ---
Calls in Arrears A/c | ` 75,000 |
Share Forfeiture A/c | ` 3,25,000 |
To Shareholder's A/c | ` 4,00,000 |
(Being the forfeiture of shares due to non-payment of allotment and first call)
Re-Issue of Shares
After forfeiture, the company can reissue the shares to new shareholders. The re-issue price should not be less than the amount already paid-up on those shares. The journal entries for re-issue of forfeited shares are as follows:
Date: Re-Issue of Shares
Particulars | Debit | Credit
--- | --- | ---
Bank A/c | ` 1,95,000 |
Share Forfeiture A/c | ` 65,000 |
Securities Premium Reserve A/c | ` 45,000 |
To Preference Share Capital A/c | ` 1,00,000 |
To Share Premium A/c | ` 75,000 |
(Being the re-issue of 3,000 preference shares at ` 65 per share, paid-up as ` 75 per share)
Conclusion
Forfeiture and re-issue of shares are important transactions in the life of a company. The journal entries for these transactions must be recorded properly to maintain accurate books of accounts. It is important to follow the legal requirements and accounting standards while recording these transactions.
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Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company.?
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Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare 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. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare 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. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company.?.
Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare 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. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare 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. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company.?.
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Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company.?, a detailed solution for Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare journal entries to record the above forfeiture and re-issue in the books of the company.? has been provided alongside types of Mr. who was the holder of 4,000 preference shares of ` 100 each, on which ` 75 per share has been called up could not pay his dues on Allotment and First call each at ` 25 per share. The Directors forfeited the above shares and reissued 3,000 of such shares to Mr. X at ` 65 per share paid-up as `75 per share. You are required to prepare 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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