A limited company issued 25,000 ordinary shares of rs. The directors then forfeited these shares and reissued 1,000 shares, as fully paid, for rs. Characteristics or features of a company i artificial person ii voluntary association. Forfeiture of shares when shares were issued at discount. This chapter deals with the accounting for share capital of companies.
Classxii accounts all videos, notes and test mcqs available on our mobile app. To discount on issue of shares ac to unpaid calls ac to shares forfeited ac 11. Forfeiture of shares is a process of withdrawing the shares allotted and seizing the amount already paid by the defaulters. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. Reissue forfeiture of shares case 2 when shares are reissued at 29. Deemed company would mean a company which is subsidiary of a public company. The company issued 6,000 shares to the public payable rs. The secretary shall prepare a list of defaulters i. The directors may reissue the forfeited shares at par, at premium or at a reissued at a discount, the maximum. Accounting for share capital cbse notes for class 12. Issue and forfeiture and reissued of shares preferred stock. Important questions for cbse class 12 accountancy accounting. Jun 03, 2019 accounting for share capital cbse notes for class 12 accountancy topic 1. Requirements may include paying an allotment or call money owed, or avoiding selling or transferring shares during a restricted.
Issueforfeiture and reissue of shares issueforfeiture. Solved illustrations on forfeiture and reissue of shares. On forfeiture of such shares, discount on shares ac is credited with the amount of discount originally debited on forfeited shares. Dec 11, 2017 complete issue and forfeiture of shares. Introduction of issue forfeiture and reissue of shares. Issueforfeiture and reissue of shares issueforfeiture and. This document is highly rated by ca foundation students and has been viewed 1047 times. Discount allowed by company is a loss to the company and shares ac will be debited when shares issued. Give journal entries to record the following transactions of forfeiture and re issue of shares and open share forfeiture account in the books of the respective companies. Issue, forfeiture and reissue of shares learning outcomes issue of prospectus inviting applications for shares from the public. Prorata based forfeiture and reissue of shares type2 youtube. To capital reserve ac xxx being net gain on reissue of shares transferred into capital reserve account reissue of forfeited shares at par initially issued at par.
Issue of share at par journal entries your article library. Sometimes on nonpayment of call money, we see forfeiture and reissue of shares. A share on which only fixed rate of dividend is paid every year without any accompanying additional rights in profits or in surplus on liquidation or winding up is called non participating pref. The provisions relating to forfeiture shall apply in case of nonpayment of any sum, which by terms of issue of shares, becomes payable at a fixed time, whether on account of nominal value or premium. Forfeiture of shares and its effects an analysis ipleaders. Problem 1 issue of shares at parjournal, cash book and balance sheet.
Forfeiture and re issue of shares by becoming a shareholder a person enters into a contract with the company that he is liable to pay full price of the share to the company from time to time and as and when the calls are made by the company if he fails to comply the company can forfeit his shares forfeiting. Dec 23, 2019 free pdf download of cbse accountancy multiple choice questions for class 12 with answers chapter 7 issue of shares. Such shareholder will lose the amount already paid by him and cease to be a member of the company. Our notes and mcq test series are now available on app anurag classes download our app. These shares represent a part of the company, so the. Issue forfeiture of shares financial capital capital.
This article aims to outline the process of forfeiture of shares as well as the main circumstances surrounding the forfeiture. Issue forfeiture of shares free download as powerpoint presentation. Forfeiture and reissue of shares for b com class 2 youtube. The following procedure must be followed for forfeiture of shares. Accountancy mcqs for class 12 chapter wise with answers pdf download was prepared based on latest exam pattern. The ownership of a company is broken into units we know as shares. Issue and forfeiture of shares academy of accounts. Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or instalments of the issue price of his shares within a certain period of time after they fall due.
Forfeiture of shares conditions procedure annulment. These shares represent a part of the company, so the shareholder becomes a part owner. The issue of shares at discount is authorised by a resolution passed by the company at its general meeting and sanctioned by the central government. Forfetire and 6 reissue of shares types of shares share issued by a company can be divided into following categories. He pleads that he has resolved his financial problems and can now pay the call on shares along with any interest due on the calls. Free download chapter pdf from description duration. The resolution must specify the maximum rate of discount at. Failure to pay call money results in forfeiture of shares.
Journalise the entry for re issue of shares whether at discount or at premium. Requirements may include paying an allotment or call money. To discount on issue of shares to callsinarrears ac to share forfeiture ac being forfeiture of shares of rseach issued at discount of rsper share for non payment of money reissue of forfeited shares. Forfeiture of shares problems and solutions accountancy. The fixed value of a share is printed on the share certificate and is called nominal par face value of a share. Case 2 when shares are issued originally at premimum not received forfeiture of shares 27. The directors of the company have the authority to reissue the forfeited shares in accordance with the provisions. Aug 18, 2017 issue of shares by cacma santosh kumar download chapter pdf from description. Companies allow discount on shares, if they are financially sound, to attract shareholders. Issue of shares by cacma santosh kumar download chapter pdf. Section 53 of the companies act, 20 prohibits issue of equity shares at a discount. From the following particulars, journalise the transactions for third call, forfeiture and reissue of shares.
Accounting treatment issue of shares forefeiture of shares. If applicants fail to pay the allotment amount and the shareholders fail to pay the call money, then the company can forfeit such shares. Accounting treatment issue of shares forefeiture of. Prorata allotment refers to the allotment of shares in proportion of the shares applied for.
A forfeited share is a share in a company that the owner loses forfeits by failing to meet the purchase requirements. May, 2015 forfeiture of shares originally issued at discount this topic is irrelevant now. Forfetire and reissue of shares 3 understand the concept and accounting treatment of callinarrears and callinadvance. Deal with the forfeiture of shares issued with different conditions. Company a joint stock company is an artificial person, created by law, having separate entity distinct from its members with a perpetual succession and a common seal. Jul 25, 2012 this animation introduces the learner various procedures to be followed by a company, while issuing shares. Call money was received in full, except from the above persons. Section 79, permits issue of shares at discount provided the following conditions are satisfied. If a shareholder fails in their obligations then they could lose their entitlement to the shares they own. It may be recalled that when the shares are issued at discount discount on shares ac is given debit, which implies that share capital is raised at loss. L ltd forfeited 470 equity shares of rs 10 each issued at premium of rs 5 per share for nonpayment of allotment money rs 8 per share including share premium rs 5 per share. Its capital is divided into 8,000 equity shares of rs. In this case, the company debits the share capital account with the amount calledup up to the date of forfeiture on shares.
Class 12 accountancy notes chapter 7 company accounts. Noor khan limited company was established with authorized capital of 100,000 shares and invited applications for 10,000 shares of 10 each at premium of rs. Issue of shares by cacma santosh kumar download chapter pdf from description duration. Reissued of forfeted shares case 1 when share are reissued at par bank ac dr. Types of share capital, issue of shares, under and over subscription of shares, forfeiture of shares. The company may issue the forfeited shares at par or at a premium. If a member fails to pay any call, or instalment of a call, on the day appointed for payment thereof, the board may, at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. Continuing with the previous illustration, after the shares are reissued to pragya, ketan applies to the company to cancel the forfeiture and reissue the shares back to him. Sep 19, 2011 forfeiture of shares shares may be forfeited if call is not paid within the stipulated time if a member fails to pay a valid call within the stipulated time, the company may sue him for recovery of the amount of the call after waiting for a reasonable period or may forfeit the shares for nonpayment of any call or installment of a call. A company is said to be deemed public company as per companies act, 20. Introduction of issueforfeiture and reissue of shares. Issue and forfeiture and reissued of shares free download as powerpoint presentation.
Accounting entry for forfeiture will vary according to the situation. Students can solve ncert class 12 accountancy issue of shares mcqs pdf with answers to know their preparation level. Make journal entries to record the issue of shares. When a company makes prorata allotment, it adjusts the excess money received at the time of application firstly, towards the allotment and then towards calls. Notes on share forfeiture and reissue of forfeited shares. Accountancy mcqs for class 12 with answers chapter 7 issue of. Feb 05, 2018 a forfeited share is a share in a company that the owner loses forfeits by failing to meet the purchase requirements. Apr 19, 2017 may 08, 2020 ppt forfeiture and reissue of shares part 2 ca foundation notes edurev is made by best teachers of ca foundation. Forfeiture of shares means cancellation of shares already allotted for nonpayment of call or installment of a call or other moneys due on shares. Described the procedure of issue and forfeiture of shares when allotment was made on prorata basis and defaulters applied number of shares. However, a company can issue shares at a price different from the face value of a share.
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