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Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up?
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Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on whi...
Forfeiture and Reissue of Shares by Prayuj Ltd.
Forfeiture of Shares
- Prayuj Ltd. forfeited 2000 shares of ₹10 each.
- The shares were fully called up, meaning the company had received the entire amount of ₹10 per share from the shareholders.
- However, the shareholders had only paid ₹14,000, which means they still owed the company ₹6,000.
- Forfeiture refers to the cancellation of shares by the company due to non-payment of calls by the shareholders.
Reissue of Shares
- After the forfeiture, Prayuj Ltd. reissued 50 shares out of the forfeited shares for ₹9 per share.
- The reissued shares were fully paid up, meaning the company received the entire amount of ₹9 per share from the new shareholders.
- Since the shares were reissued at a lower price than their face value of ₹10, the company had to write off the difference of ₹1 per share.
Reasons for Forfeiture and Reissue
- Forfeiture is usually done when shareholders fail to pay the calls on their shares.
- Reissue is done to raise new capital for the company by selling the forfeited shares to new shareholders.
- The company may reissue the shares at a discount to attract new buyers.
- The forfeited shares may also be cancelled instead of being reissued.
Impact on Shareholders and the Company
- The shareholders who failed to pay the calls on their shares lost their ownership of those shares and any money they had already paid towards the shares.
- The company was able to raise new capital by reissuing the forfeited shares.
- The company also had to write off the difference between the face value and reissue price of the shares.
- The reissue of shares may dilute the ownership of existing shareholders if the new shares are issued in excess of the company's authorized share capital.
Community Answer
Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on whi...
Share capital a/c. dr.(2000 x10) 20000 to share forbeiture a/c.(2000x7) 14000 to call in arrears. a/c.(2000x3) 6000
bank a/c. dr.(50x9) 450share fobeiture. a/c. dr.(50x1) 50 to share capital a/c. (50x10) 500
share forbeiture a/c. dr.(50x6) 300 to capital reserve a/c (50x6) 300
bank a/c. dr.(50x9) 450share fobeiture. a/c. dr.(50x1) 50 to share capital a/c. (50x10) 500
share forbeiture a/c. dr.(50x6) 300 to capital reserve a/c (50x6) 300
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Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up?
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Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up?.
Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Prayuj Ltd. forfeited 2000 shares of ₹10 each, fully called up, on which they had received only ₹14,000.50 of the forfeited shares were reissued for ₹9 per share fully paid up?.
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