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प्रश्न
State, whether the following statements is True or False.
Forfeited shares are reissued at par only.
विकल्प
True
False
उत्तर
False
Explanation: Forfeited shares can be issued at par, at a discount or at a premium, as decided by the board of directors. The forfeited amount is transferred to Share Forfeiture Account. However, when the forfeited shares are reissued, the balance amount is transferred to the Capital Reserve Account.
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संबंधित प्रश्न
Alfa Ltd. invited applications for issuing 75,000 equity shares of Rs 10 each. The amount was payable as follows :
On application and allotment - Rs 4 per share
On the first call - Rs 3 per share
On second and final call - balance
Application for 1,00,000 shares was received. Shares were allotted to all the applicants on pro-rata basis and excess money received with applications was transferred towards sums due on the first call. Vibha who was allotted 750 shares failed to pay the first call. Her shares were immediately forfeited.
Afterwards, the second call was made. The amount due on the second call was also received except on 1000 shares, applied by Monika. Her shares were also forfeited. All the forfeited shares were re-issued to Mohit for Rs 9,000 as fully paid up.
Pass necessary journal entries in the books of Alfa Ltd. for the above transactions
'Wellness Ltd.' invited applications for issuing 40,000 equity shares of Rs 10 each at a discount of 10%.
The amount was payable as follows :
On application and allotment - Rs 4 per share
On the first call - Rs 3 per share
On second and final call - the balance
Applications for 39,000 shares were received and the allotment was made to all the applicants.
The payment was received as per the following details:
On 30,000 shares - Full amount
On 6,000 shares - Rs 7 per share
On 3,000 shares - Rs 4 per share
The Directors forfeited those shares on which less than Rs 7 per share were received. The forfeited shares were re-issued at `8 per share as fully paid up.
Pass necessary Journal Entries in the books of the company for the above transactions.
'BMY Ltd.' invited applications for issuing 1,00,000 equity shares of Rs 10 each at a premium of `10 per share. The amount was payable as follows :
On application - Rs 10 per share (including Rs 5 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 300 shares paid the full share money with
an application. Another shareholder holding 200 shares failed to pay the allotment money. His shares were forfeited. Later on, these shares were re-issued for Rs 4,000 as fully paid up.
Pass necessary journal entries for the above transaction in the books of BMY Ltd.
'Blur Star Ltd.' was registered with an authorized capital of Rs 2,00,000 divided into 20,000 shares of Rs 10 each. 6,000 of these shares were issued to the vendor for building purchased. 8,000 shares were issued to the public and Rs 5 per share were called up as follows:
On application - Rs 2 per share
On allotment - Rs 1 per share
On the first call - Balance of the called up amount
The amounts received on these shares were as follows:
On 6,000 shares - Full amount called
On 1,250 shares - Rs 3 per share
On 750 shares - Rs 2 per share
The directors forfeited 750 shares on which Rs 2 per share were received.
Pass necessary journal entries for the above transactions in the books of Blue Star Ltd
'Nigam Limited' invited applications for issuing 15,000 equity shares of Rs 10 each at a discount of Rs 1 per share. The amount was payable as follows:
On application - Rs 2 per share
On allotment - Rs 3 per share
On first and final call - Rs 4 per share
Applications for 18,000 shares were received. Shares were issued proportionately to all applicants. Excess money received with applications was adjusted towards sums due on allotment. Ramesh who had applied for 360 shares failed to pay allotment and first and final call money. Naresh to whom 150 shares were allotted failed to pay the first and final call money. Shares of both Ramesh and Naresh were forfeited. Out of the forfeited shares, 200 shares were re-issued at `9 per share as fully paid up. The re-issued shares included all the shares of Naresh. Pass necessary journal entries for the above transactions in the books of 'Nigam Limited'.
JY Ltd. invited applications for issuing 70,000 equity shares of Rs 10 each at a discount of 10%. The amount was payable as follows:
On applications and allotment - Rs 4 per share
On first and final call - the balance amount
Application for 2,00,000 shares were received. Applications for 60,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. All money was received except on 1,400 shares applied by Naresh. His shares were forfeited. The forfeited shares were re-issued at the maximum discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of JY Ltd.
On 1st April 2012, Micro-tech Ltd. was formed with an authorised capital of Rs 50,00,000 divided into 5,00,000 equity shares of Rs 10 each. The company issued a prospectus inviting applications for 4,50,000 equity shares. The company received applications for 4,20,000 equity shares.
During the first year, Rs 8 per share were called. Ram holding 1,000 shares and Rajesh holding 2,000 shares did not pay the first call of Rs 2 per share. Rajesh's shares were forfeited after the first call and later on 1,500 of the forfeited share were re-issued at Rs 6 per share, Rs 8 called up. Show the following:
a. Share Capital in the Balance Sheet of the company as per revised Schedule VI Part I of the Companies Act, 1956.
b. Also, prepare 'Notes to Accounts' for the same
X Ltd., issued 50,000 shares of Rs 10 each at a premium of Rs 2 per share payable as follows:
Rs 3 on application
Rs 6 on allotment (including premium) and Rs 3 on call
Applications were received for 75,000 shares and a pro-rata allotment was made as follows:
To the applicants of 40,000 shares, 30,000 shares were issued and for the rest 20,000 shares were issued. All money due were received except the allotment and call money from Ram who had applied for 1,200 shares (out of the group of 40,000 shares). All his shares were forfeited. The forfeited shares were re-issued for Rs 7 per share fully paid up. Pass necessary Journal Entries for the above transaction.
State, whether the following statements is True or False.
A public company forfeits share on non-payment of final call only.
Long Answer Question
Explain the term ‘Forfeiture of Shares’ and give the accounting treatment on forfeiture.
The Directors of M Ltd resolved on 1st May, 2015 that 2,000 Equity Shares of ₹ 10 each , ₹ 7.50 paid be forfeited for non-payment of final call of ₹ 2.50 . On 10th June, 2015, 1,800 of these shares were reissued for ₹ 6 per share . Give necessary Journal entries .
Give necessary journal entries:
(i) The Directors of Devendra Ltd. resolved on 1st January 2010 that Equity Shares of ₹ 10 each, ₹ 8 paid-up be forfeited for non-payment of final call of ₹ 2. On 1st February, 60 of these shares were reissued @ ₹ 7 per share as fully paid-up.
(ii) Virender Limited forfeited 20 shares of ₹ 100 each(₹ 60 called-up) issued at par to Mukesh on which he had paid ₹ 20 per share. Out of these, 15 shares were reissued to Sanjeev as ₹ 60 paid-up for ₹ 45 per share.
Pass necessary journal entries in the books of the company for the following transactions:
Vishesh Ltd. forfeited 1,000 Equity Shares of ₹ 10 each issued at a premium of ₹ 2 per share for non-payment of allotment money of ₹ 5 per share including premium. The final call of ₹ 2 per share was not yet called on these shares. Of the forfeited shares 800 shares were reissued at ₹ 12 per share as fully paid-up.
The remaining shares were reissued at ₹ 11 per share fully paid-up.
Amrit Ltd. issued 50,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as ₹ 3 on application, ₹ 4 on allotment (including premium) , ₹ 2 on first call and the remaining on second call.
Applications were received for 75,000 shares and pro rata allotment was made to all the applicants.
All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for ₹ 9,600. Final call was not made . Pass necessary Journal entries.
Choose the appropriate alternative from the given options:
Vanya Ltd. forfeited 20,000 equity shares of ₹ 100 each for non-payment of first and final call of ₹ 40 per share. The maximum amount of discount at which these shares can be re-issued will be:
Concept Stationary Ltd. invited applications for issuing 3,00,000 shares of ₹ 10 each at a premium of ₹ 3 per share. The amounts were payable as follows:
On application and allotment – ₹ 7 per share.
On first & final call – balance (including a premium of ₹ 3)
Applications were received for 4,00,000 shares & allotment was made as follows:
(i) To applicants for 80,000 shares – 80,000 shares.
(ii) To applicants for 40,000 shares – nil
(iii) The balance of the applicants were allotted shares on a pro-rata basis.
Excess money received with applications was adjusted towards sums due on the first and final call.
Amit, who belonged to category (i) and was allotted 4,000 shares and Veni, who belonged to category (iii) and was allotted 4,400 shares failed to pay the first and final call money. Their shares were forfeited. The forfeited shares were re-issued at ₹ 7 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.
Capital reserves are created from ______.
Money received in advance from shareholders before it is actually called-up by the directors is ______.
The balance of share forfeited account after the reissue of forfeited shares is transferred to ______.
Vishnu Ltd. forfeited 20 shares of ₹10 each, ₹8 called up, on which John had paid application and allotment money of ₹5 per share, of these, 15 shares were reissued to Parker as fully paid up for ₹6 per share. What is the balance in the share Forfeiture Account after the relevant amount has been transferred to Capital Reserve Account?
The balance of share forfeited account after the reissue of forfeited shares is transferred to ______?
When shares are forfeited, the Share Capital Account is debited with the:
Forfeiture of shares results in the reduction of:
When forfeited shares are re-issued the amount of discount allowed on these shares cannot exceed ______.
Based on the below information, you are required to answer the following question:
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Nidiya Limited was incorporated on 1st April 2017 with a registered office in Mumbai. The capital clause of the memorandum of Association reflected a registered capital of 8,00,000 equity shares of ₹ 10 each and 1,00,000 preference shares of ₹ 50 each. Since some large investments were required for building and machinery the company in consultation with vendors, M/s VPS Enterprises, issued 1,00,000 equity shares and 20,000 preference shares at par with them in full consideration of assets acquired. Besides this, the company issued 2,00,000 equity shares for cash at par payable as ₹ 3 on application, 2 on the allotment, 3 on the first call and 2 on the second call. Till date, the second call has not yet been made and all the shareholders have paid except Mr. Ajay who did not pay allotment and calls on his 300 shares and Mr. Vipul who did not pay the first call on his 200 shares. Shares of Mr. Ajay were then forfeited and out of the 100 shares were reissued at ₹ 12 per share. |
What is the amount of security premium reflected in the balance sheet at the end of the year?
Pass entries for forfeiture and re-issue in the following case.
Vikram Ltd. forfeited 5,000 shares of Rahul, who had applied for 6,000 shares for non-payment of allotment money of ₹ 5 per share and first and final call of ₹ 2 per share. Only application money of ₹ 3 was paid by him. Out of these 3,000 shares were re-issued @ ₹ 12 per share as fully paid.
An equity share of ₹10 fully called up on which ₹ 6 has been paid was forfeited for the non-payment of the balance amount. At which of the following minimum price can it be reissued?
NH Ltd, with an authorized capital of ₹ 10,00,000 divided into 1,00,000 Equity shares of ₹10 each, issued 50,000 shares to the public at a premium of ₹ 2 per share, payable as follows:
₹ 5 on Application (including premium)
₹ 3 on Allotment
₹ 4 on First and Final Call.
The subscription was at par and the share money was received in full with the exception of the allotment money on 4,000 shares held by shareholder Ravi and the call money on 6,000 shares (including Ravi's shares).
The above 6,000 shares were forfeited by the company and 5,000 of these (including the shares which had been allotted to Ravi) were reissued at ₹ 8 per share as fully paid-up.
You are required to pass journal entries to record the above transactions in the books of the company.
Hero Ltd. was registered with a capital of ₹ 5,00,000 divided into 20,000 shares of ₹ 25 each, payable as:
| On Application | ₹ 5 per share |
| On Allotment | ₹ 10 per share |
| On Call | The Balance |
The company offered to the public for subscription 10,000 shares. It received applications for 11,100 shares.
From amongst the applicants:
- Vimal, who had applied for 1,200 shares, paid ₹ 6,000 on application. but was allotted only 600 shares.
- Mohan applied for 1,000 shares, paid the full amount of ₹ 25,000 with his application but was allotted only 500 shares.
- Vineet, who had applied for 1,500 shares, paid his application and allotment money in order but did not pay the call money.
- The remaining applicants paid as and when due.
The surplus money paid by both Vimal and Mohan was used towards allotment and call and any surplus beyond the call was refunded. The company forfeited Vineet’s shares and later re-issued 500 of the forfeited shares @ ₹ 20 per share fully paid up.
You are required to pass journal entries in the books of Hero Ltd.
