A company may issue shares at their face value or at a price other than the face value. When shares are issued at a price equal to their face value it is termed as shares issued at par.
What journal entries are made for the forfeiture of shares and their reissue?
The shares are reissued as fully paid up to one of the directors @ Rs 9 per share. No entries are made on forfeiture but when the shares are reissued, the cash received is credited to Equity Share Capital Account. Give the rectifying entry. Thus, Bank has been correctly debited.
What is the journal entry for issue of shares?
Such issues of shares have been clearly shown in Balance Sheet and distinguish such shares from shares issued for cash. The journal entry is: When the settlement is made by issue of shares of fully paid shares, such shares are known as shares issued for consideration other than cash.
What type of account is forfeited shares?
When Forfeiture of shares Issued at Par The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.
What do you mean by reissue of share?
issue of forfeited shares
Shares are forfeited because only a part of the due amount of such shares is received and the balance remains unpaid. Such sale of shares is called ‘reissue of shares’. Thus reissue of shares means issue of forfeited shares.
When shares are forfeited share capital account will be debited by?
nominal value of shares.
What are accounting entries on forfeiture of shares?
Accounting Entries on Forfeiture of Share 1 Securities Premium amount has been received- Here, the share capital amount is debited with the called-up amount and… 2 Securities Premium amount has not been received – the share capital amount is debited with the called-up amount. If… More …
What happens to shares that are forfeited by a company?
In such a case, the company has the right to forfeit the shares. In the process of forfeiture, the shares on which allotment money or calls are due but not paid are forfeited or taken back and cancelled by the company.
Which is the correct option for share forfeiture?
Ans: The correct option is C. Since the balance left in share forfeiture account after re-issue is treated as a profit, it is transferred to Capital Reserve A/c.
Do you have to pay dividend for forfeiture of shares?
If the articles authorize, the forfeiture shall include forfeiture of all dividends declared in respect of the forfeited shares and such dividend is not actually paid before the forfeiture of the shares. 2) Proper notice: Before the shares of a member are forfeited, proper notice to that effect must have been served.
