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Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.?
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Sunena, a shareholder holding 500 shares of rs10 each, did not pay the...
Journal Entry for Forfeiture of Shares:
Accounting for the forfeiture of shares involves the following journal entries:
1. Initial allotment of shares:
Debit: Bank Account
Credit: Share Capital Account
2. Forfeiture of shares:
Debit: Share Capital Account (the value of the forfeited shares)
Debit: Calls in Arrears Account (the unpaid amount on the forfeited shares)
Credit: Share Forfeiture Account (the value of the forfeited shares)
Credit: Share Capital Account (the nominal value of the forfeited shares)
Explanation:
The above journal entry shows the forfeiture of shares due to non-payment of the calls. Sunena had been allotted 500 shares of Rs. 10 each, but she did not pay the allotment money of Rs. 4 per share (including premium of Rs. 2) and the first and final call of Rs. 3. Therefore, the company forfeited her shares after the first and final call.
The initial allotment of shares is recorded by debiting the bank account and crediting the share capital account. However, since Sunena did not pay the calls, her shares were forfeited.
The forfeiture of shares is recorded by debiting the share capital account (the value of the forfeited shares) and the calls in arrears account (unpaid amount on the forfeited shares) and crediting the share forfeiture account (the value of the forfeited shares) and the share capital account (the nominal value of the forfeited shares).
In this case, the value of the forfeited shares is Rs. 10 (nominal value) + Rs. 2 (premium) = Rs. 12 per share. Therefore, the total value of the forfeited shares is 500 shares x Rs. 12 = Rs. 6,000.
The calls in arrears account is debited with Rs. 1,500 (500 shares x Rs. 3 per share) which is the unpaid amount on the forfeited shares.
Hence, the above journal entry reflects the forfeiture of shares and the necessary accounting treatment for the same.
Accounting for the forfeiture of shares involves the following journal entries:
1. Initial allotment of shares:
Debit: Bank Account
Credit: Share Capital Account
2. Forfeiture of shares:
Debit: Share Capital Account (the value of the forfeited shares)
Debit: Calls in Arrears Account (the unpaid amount on the forfeited shares)
Credit: Share Forfeiture Account (the value of the forfeited shares)
Credit: Share Capital Account (the nominal value of the forfeited shares)
Explanation:
The above journal entry shows the forfeiture of shares due to non-payment of the calls. Sunena had been allotted 500 shares of Rs. 10 each, but she did not pay the allotment money of Rs. 4 per share (including premium of Rs. 2) and the first and final call of Rs. 3. Therefore, the company forfeited her shares after the first and final call.
The initial allotment of shares is recorded by debiting the bank account and crediting the share capital account. However, since Sunena did not pay the calls, her shares were forfeited.
The forfeiture of shares is recorded by debiting the share capital account (the value of the forfeited shares) and the calls in arrears account (unpaid amount on the forfeited shares) and crediting the share forfeiture account (the value of the forfeited shares) and the share capital account (the nominal value of the forfeited shares).
In this case, the value of the forfeited shares is Rs. 10 (nominal value) + Rs. 2 (premium) = Rs. 12 per share. Therefore, the total value of the forfeited shares is 500 shares x Rs. 12 = Rs. 6,000.
The calls in arrears account is debited with Rs. 1,500 (500 shares x Rs. 3 per share) which is the unpaid amount on the forfeited shares.
Hence, the above journal entry reflects the forfeiture of shares and the necessary accounting treatment for the same.
Community Answer
Sunena, a shareholder holding 500 shares of rs10 each, did not pay the...
Solution:
Journal
Particular. Dr. Cr.
Share Allotment A/c Dr (500×4) 2000
To share capital A/c (500×2) 1000
To SPR A/c (500×2) 1000
(being the allotment money due)
Calls-in-arrears A/c Dr. 2000
To Share allotment A/c. 2000
(being amount not received)
Share first call A/c Dr (500×3). 1500
To share capital A/c. 1500
(being amount due)
Calls-in-arrears A/c Dr. 1500
To share first call A/c. 1500
(being amount not received)
Share capital A/c Dr (500×10). 5000
SPR A/c Dr(500×2). 1000
To allotment A/c (500×4). 2000
To First call A/c. (500×3). 1500
To Share forfeiture A/c (500×5). 2500
(being shares forfeited)
Share forfeiture A/c Dr. 2500
To capital reserve A/c. 2500
(being amount transfered)
Journal
Particular. Dr. Cr.
Share Allotment A/c Dr (500×4) 2000
To share capital A/c (500×2) 1000
To SPR A/c (500×2) 1000
(being the allotment money due)
Calls-in-arrears A/c Dr. 2000
To Share allotment A/c. 2000
(being amount not received)
Share first call A/c Dr (500×3). 1500
To share capital A/c. 1500
(being amount due)
Calls-in-arrears A/c Dr. 1500
To share first call A/c. 1500
(being amount not received)
Share capital A/c Dr (500×10). 5000
SPR A/c Dr(500×2). 1000
To allotment A/c (500×4). 2000
To First call A/c. (500×3). 1500
To Share forfeiture A/c (500×5). 2500
(being shares forfeited)
Share forfeiture A/c Dr. 2500
To capital reserve A/c. 2500
(being amount transfered)
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Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.?
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Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.?.
Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.?.
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Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.?, a detailed solution for Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.? has been provided alongside types of Sunena, a shareholder holding 500 shares of rs10 each, did not pay the allotment money of rs4 per share( including premium of rs2) and the first and final call of rs3. Her shares were forfeited after first and final call. Give necessary journal entry for forfeiture of the shares.? theory, EduRev gives you an
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