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Forfeiture of Shares-Issued at Par

Give the mean...

Question

Give the meaning of forfeiture of shares.

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Solution

Forfeiture of shares is referred to as the situation when the allotted shares are cancelled by the issuing company due to non-payment of the subscription amount as requested by the issuing company from the shareholder.

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Q. Explain the term ‘Forfeiture of shares’ and give the accounting treatment on forfeiture.

Explain the term ‘Forfeiture of shares’ and give the accounting treatment on forfeiture.

The result of forfeiture of shares is :

Q. Forfeiture of shares is the action taken by a company to the shares.

Q. Ashoka Limited Company which had issued equity shares of Rs.20 each at a discount of Rs.4 per share. Forfeited 1,000 shares for non-payment of final call of Rs.4 per share. 400 of the forfeited shares are reissued at Rs.14 per share out of the remaining shares of 200 shares reissued at Rs.20 per share. Give journal entries for the forfeiture and reissue of shares and show the amount transferred to capital reserve and the balance in share forfeiture account.

Ashoka Limited Company which had issued equity shares of ₹.20 each at a premium of ₹. 4 per share, forfeited 1,000 shares for non-payment of final call of ₹.2 per share. 400 of the forfeited shares were reissued at ₹.14 per share out of the remaining shares of 200 shares reissued at ₹.20 per share. Give journal entries for the forfeiture and reissue of shares and show the amount transferred to capital reserve and the balance in Share Forfeiture Account.

Whenever securities premium is received and the shares are forfeited, what will be the treatment in Share Forfeiture A/c?

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