By this date, amounts due on 1,950,000 ordinary shares have been received. Forfeiture of shares conditions procedure annulment. Accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares. Issue forfeiture of shares financial capital capital surplus. 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. The secretary shall prepare a list of defaulters i. The key difference between allotment and issue of shares is that an allotment is a method of share distribution in a company whereas share issue is the offering of the ownership of the shares to shareholders to hold, and later transfer to another investor. Issue, forfeiture and reissue of shares prof rahul j. It is very common that one or more shareholders fail to pay their allotment and or calls on the due dates. The ownership of a company is broken into units we know as shares. Forfeiture and reissue of shares advanced corporate.
In this article we will discuss about the forfeiture and reissue of shares. Nature and types a company is an artificial person created by law, having separate entity with a perpetual succession and a common seal. Issue, forfeiture, reissue of shares pro rata allotment. Accountancy class 12 class 12 notes edurev is made by best teachers of class 12. Ncert solutions cbse sample papers accountancy class 12 accountancy. Terms of issue of shares i issue of shares at par when shares are issued at their face value, the shares are said to have been issued at par. Forfeiture and reissue of shares for b com class 2 youtube. Its capital is divided into 8,000 equity shares of rs. Regarding reissue of forfeited shares accounting entries. Pass journal entries to record the issue of shares. This cannot happen because the board of directors has the power to cancel the forfeiture only before the disposal or reissue of shares as per regulation 312 of table f, schedule i of companies act, 20. This chapter deals with the accounting for share capital of companies. Reissue part of shares and capital reserve students forum. Reissue forfeiture of shares case 2 when shares are reissued at 29.
Ncert solutions for class 12 accountancy part ii chapter 1 accounting for share capital. Of the shares forfeited, 1,000 share were reissued as fully paidup for rs. Issue, forfeiture and reissue of shares long answer numerical questions shares issued at par shares fully subscribed problem 1 sri ganesh company ltd. Reissue of forfeited shares part 1 important for ugc net. The certificate of incorporation of a company is issued by registrar of. The issue of shares at discount is authorised by a resolution. A limited company issued 25,000 ordinary shares of rs. The forfeited shares may then be disposed by sale or in any other manner as directed by the board. Issue of shares by cacma santosh kumar download chapter pdf. The board of directors of the company is empowered to reissue the forfeited shares if authorized by its articles. This document is highly rated by b com students and has been viewed 1112 times. The company issued 6,000 shares to the public payable rs. On 15 september 2017, the shares on which call money has not been received are forfeited and sold as fully paid.
Prorata based forfeiture and reissue 4 topics sample lesson. New share issue share rights issue forfeiture and reissue of shares payment of dividends each question is independent of the other questions. Reissue of forfeited shares accounts class 12 notes. Forfeiture and reissue of shares which are originally issued at par, golden rule easy method, sl examples, t. Every surrender of shares, like forfeiture, amounts to reduction of capital. Introduction of issue forfeiture and reissue of shares. Unlimited downloads book pdf notescharts unlimited demo video lecture access. Issue forfeiture of shares financial capital capital. This document is highly rated by class 12 students and has been viewed 1682 times. The directors of the company have the authority to re issue the forfeited shares in accordance with the provisions contained in articles of association or such terms directors find it suitable. A company may receive applications for shares more than the number of shares it has offered to the public. This pdf file for class 12 accounts subjects reissue of forfeited shares topic contains brief and concise notes for easy understanding of topics and quick learning.
Forfeiture of shares problems and solutions accountancy. 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. Jun 28, 20 28 june 20 hi re issue of forfeited shares where a company had lien on fully paid shares belonging to the deceased shareholder, it is obligatory on the company to give notice of its sale to the legal representative of the deceased shareholder, but if this is not done the sale would nevertheless be a valid sale. Forfeiture of shares and its effects an analysis ipleaders. Issue forfeiture of shares free download as powerpoint presentation. Case 2 when shares are issued originally at premimum not received forfeiture of shares 27.
Even after such notice if the shareholder does not pay, then the shares will be canceled. Re issue of forfeited shares share forfeiture ac 30. When shares which have been issued at par are forfeited, first find out the amount with which share capital account has been credited in respect of forfeited shares. Issueforfeiture and reissue of shares issueforfeiture and.
A company may re issue the forfeited shares at any time it likes. Forfeiture of shares is a process of withdrawing the shares allotted and seizing the amount already paid by the defaulters. Issue of shares by cacma santosh kumar download chapter. Shares are forfeited, the title of such shareholder is extinguished but the amount paid is not refunded to him. Issue of share at par journal entries your article library.
Practice questions issue, forfeiture, reissue and valuation of rights 1. Dec 07, 2019 accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares. Scribd is the worlds largest social reading and publishing site. The notice must provide the shareholder with a minimum of 14 days to make the payment due, or his shares will be forfeited. But the face value of the share is rs 100, so selling the share to pragya for a price below rs 40 amounts to issue of shares at a discount. Forfeiture and re issue the term forfeit actually means taking away of property on breach of a condition. The maximum amount of discount on reissue of forfeited shares is that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares on their original issue and that the discount allowed on re issue of forfeited shares should be debited to the share forfeited. Accounting for share capital class 12 accountancy extra questions. Accounting entries regarding reissue of forfeited shares. Day 34 forfeiture and reissue of shares class 12 accounting of. The title of the purchaser to the forfeited shares is not affected by any irregularity or invalidity in the forfeiture or sale of the shares.
Give journal entries for the forfeiture and re issue in each case. Section 53 of the companies act, 20 prohibits issue of equity shares at a discount. These shares can be reissued at par value, at premium value or at discount. Reissued of forfeted shares case 1 when share are reissued at par bank ac dr. Issue, forfeiture and re issue of shares learning outcomes issue of prospectus inviting applications for shares from the public. A company is said to be deemed public company as per companies act, 20. Issue of shares for cash company account issue of shares. When shares are reissued, return of the forfeited shares need not be filed under section 75 1 of the companies act, 1956.
Issue and forfeiture and reissued of shares preferred. Capital funds provided by the owners into a business. Make journal entries to record the issue of shares. Issue of shares by cacma santosh kumar download chapter pdf from description. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. Manoj comes and pleads with the company to cancel the forfeiture of shares after the reissue of the forfeited shares to mr. Our notes and mcq test series are now available on app. Before such forfeiture is done a notice must be given to the shareholder. 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.
A forfeited share may be sold or otherwise disposed of, on such terms and in such manner as the board thinks fit. The directors of the company are empowered to re issue the forfeited shares if authorized by its articles. Forfeiture of shares is the action taken by a company to cancel the shares. Forfetire and reissue of shares 4 share capital total capital of the company is divided into a number of small indivisible units of a fixed amount and each such unit is called a share. Notes on share forfeiture and reissue of forfeited shares grade.
Accounting method ii assignment share issues this assignment comprises four questions all dealing with share issue topics. To discount on issue of shares ac to unpaid calls ac to shares forfeited ac 11. Dec 07, 2016 forfeiture and reissue of shares by commerce expert duration. Reissue of forfeited shares is not allotment of shares but fundamentals of accounting.
One is premium has not been received on the forfeited shares and another one is. If applicants fail to pay the allotment amount and the shareholders fail to pay the call money, then the company can forfeit such shares. Test your understanding i state which of the following statements are true a a company is formed according to the provisions of indian companies act, 1932. These shares represent a part of the company, so the. This document is highly rated by ca foundation students and has been viewed 1040 times. Failure to pay call money results in forfeiture of shares. Issue and forfeiture and reissued of shares preferred stock. Notes on share forfeiture and reissue of forfeited shares. Accounting entries for re issue of forfeited share transaction entry 1. The following procedure must be followed for forfeiture of shares. There is no restriction on amount of premium for reissue of shares.
Practice questions issue, forfeiture, reissue and valuation. Classxii accounts all videos, notes and test mcqs available on our mobile app. Short particulars of reissued shares will be advised to the stock exchange concerned. Issue and forfeiture of shares academy of accounts. Issueforfeiture and reissue of shares issueforfeiture. Important questions for cbse class 12 accountancy accounting. Deal with the forfeiture of shares issued with different conditions. Introduction to forfeiture and reissue of shares 2. Apr 19, 2017 apr 07, 2020 ppt forfeiture and reissue of shares part 2 ca foundation notes edurev is made by best teachers of ca foundation. Ts grewal solutions for class 12 accountancy company. Journalise the entry for re issue of shares whether at discount or at premium. Easy way commerce classes by tabita massey 4,536 views.
Journal entries on forfeiture or surrender and reissue of shares. Journal entries on forfeiture or surrender and reissue of shares 3. It also contains solved questions for the better grasp of the subject in an easy to download pdf file and will help you score more marks in board exams. In case the previous shareholder whose shares had been forfeited requests the company to cancel the forfeiture, the board can nullify the forfeiture if it thinks that this is in the interest of the company. May, 2015 forfeiture of shares originally issued at discount this topic is irrelevant now. Issue and forfeiture and reissued of shares free download as powerpoint presentation. But the discount on re issue should not exceed the amount forfeited. The forfeiture of shares does not amount to reduction of share capital since at any time, the board of directors are having the power to reissue the forfeited subject to the articles of association and none of modes of the reduction of capital as per section 100 of companies act, 1956 is applicable to the forfeiture of shares. The re issue of forfeited shares is treated as re sale and not the allotment, and therefore, no return of allotment of re issue of forfeited shares need be filed with the registrar of companies. The forfeited shares can be reissued by the company at any price. There are two cases for issue of shares at premium. Deemed company would mean a company which is subsidiary of a public company. When shares are reissued, return of the forfeited shares need.
If the articles permit, company can re issue the forfeited shares at par or at premium or at a discount. But, to reissue shares there is restriction on amount of discount a company can offer. Ts grewal solutions for class 12 accountancy company account accounting for share capital volume ii. Being share forfeited account transferred b reissue of forfeited shares originally issued at discount if the shares which were originally issued at a discount are forfeited and reissued, then on reissue the new allottee would get the advantage of discount, besides getting some additional discount from share forfeited account. May 15, 2014 practice questions issue, forfeiture, reissue and valuation of rights 1. Maximum permissible discount for reissue of shares is equal to the amount forfeited on such shares. Types of share capital, issue of shares, under and over subscription of shares, forfeiture of shares. Make necessary journal entries for the forfeiture and for reissue of these shares if. The fixed value of a share, printed on the share certificate, is called nominal par face value of a share. Re issue of forfeited shares where a company had lien on fully paid shares belonging to the deceased shareholder, it is obligatory on the company to give notice of its sale to the legal representative of the deceased shareholder, but if this is not done the sale would nevertheless be a.
Aug 18, 2017 issue of shares by cacma santosh kumar download chapter pdf from description. Forfetire and reissue of shares 3 understand the concept and accounting treatment of callinarrears and callinadvance. Nov 17, 2010 in the case of a company whose shares are listed in a recognized stock exchange, re issue of forfeited shares shall be as per guidelines for preferential issue of the securities and exchange board of india and the listing agreement. Problem 1 issue of shares at parjournal, cash book and balance sheet. Oct 05, 2019 in this question first shares are forfeited than reissued where forfeiture of shares means the process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or installments of the issue price of his shares within a certain period of time after they fall due. Accounting of share capital how to pass journal entries of share share application share allotment pro rata issue of share other than cash.
Stock exchange will be advised of the forfeiture in the case of listed shares, immediately after the board meeting. Discount on reissue to share capital ac being forfeited shares reissued at discount re issue of shares originally issued at discount at a discount this topic is irrelevant now. But in no case, the amount collected on the reissue of such shares plus the amount already forfeited be less than the amount credited as paid upon reissue of shares. You can see some ppt forfeiture and reissue of shares part 2 sample questions with examples at the bottom of this page. Accounting for share capit al share and share capital.
Not all of these areas have been covered in the equity topic in accounting method ii. Forfeiture and reissue of shares 1 lectures 39 min forfeiture and reissue of shares which are originally issued at premium, golden rule easy method, sl examples, t. 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. Difference between allotment and issue of shares compare. The conditions of forfeiture of shares are forfeiture of shares issued at par, forfeiture of shares issued at discount and forfeiture of shares issued at premium. Ncert solutions for class 12 accountancy part ii chapter 1. These shares represent a part of the company, so the shareholder becomes a part owner.
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