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Question
Short Answer Question
When can shares be Forfeited?
Solution
When a shareholder fails to pay the allotment money or any subsequent calls, then the company informs the shareholder by giving him/her a proper notice.If even after the notice, the shareholder fails to pay the due money, then the company forfeits the shares allotted to him/her.
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RELATED QUESTIONS
XYZ Ltd. invited applications for 40,000 equity shares of Rs.100 each at a discount of 6%. The amount was payable as follows:
On Application and Allotment - Rs.90 per share
On First and Final call - the balance amount.
Applications for 60,000 shares were received. Applications for 10,000 shares were rejected and shares were allotted on pro-rata basis to remaining applicants. Excess application money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. A shareholder, who applied for 50 share, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were re-issued at Rs.97 per share fully paid up. Pass necessary journal entries for the above transactions in the books of XYZ Ltd.
'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.
'X Ltd.' invited applications for issuing 10,000 equity shares of Rs 100 each at a premium of Rs 100 per share. The amount was payable as follows:
On application and allotment - Rs 100 per share (including Rs 50 premium)
On first and final call - The balance
The issue was fully subscribed. A shareholder holding 500 shares paid the full share money with an application. Another shareholder holding 200 shares failed to pay the first and final call money. His shares were forfeited. The forfeited shares were re-issued for Rs 19,000 as fully paid up.
Pass necessary journal entries for the above transactions in the books of the company
'X Ltd.' invited applications for issuing 10,000 equity shares of Rs 100 each at a premium of `100 per share. The amount was payable as follows:
On application and allotment - Rs 100 per share (including Rs 50 premium)
On first and final call - The balance
The issue was fully subscribed. A shareholder holding 500 shares paid the full share money with an application. Another shareholder holding 200 shares failed to pay the first and final call money. His shares were forfeited. The forfeited shares were re-issued for Rs 19,000 as fully paid up.
Pass necessary journal entries for the above transactions in the books of the company
Luxury Cars Ltd.' invited applications for issuing 10,000 equity shares of Rs 50 each at a premium of Rs 100 per share. The amount was payable as follows :
On application - Rs 75 per share (including Rs 50 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares were forfeited. The forfeited shares were later on re-issued for Rs 90 per share as fully paid up.
Pass necessary journal entries for the above transaction in the books of the company.
'Software Ltd.' invited applications of issuing 70,000 equity share of Rs 10 each on which Rs 7 per share were called up, which were payable as follows:
On application - Rs 2 per share
On allotment - Rs 3 per share
On first call - The balance
The amount was received as follows:
On 40,000 shares - Rs 7 per share
On 20,000 shares - Rs 5 per share
On 10,000 share - Rs 2 per share
The directors forfeited 30,000 shares on which less than Rs 7 per share were received. Later on, the forfeited share was re-issued at Rs 5 per share, as Rs 7 per share paid up
Pass necessary journal entries for the above transactions in the books of the company.
Ratan Limited invited applications for issuing 12,000 equity shares of Rs 100 each at a premium of Rs 75 per share. The amount was payable as follows :
On application and allotment — Rs 100 per share (including Rs 50 premium)
On first and final call — The balance
Applications for 15,000 shares were received. Shares were allotted on pro-rata basis to all applicants. Excess money received with applications was adjusted towards sums due on first and final call. Govind who had applied for 300 shares paid the full share money at the time of applying for shares. Girdhar, who had applied for 600 shares, failed to pay the first and final call money. His shares were forfeited. Out of the forfeited shares, 300 shares were re-issued at Rs 90 per share as fully paid-up.
Pass necessary journal entries for the above transactions in the books of 'Ratan Limited'.
'Kalyan Limited' invited applications for issuing 90,000 equity shares of Rs 10 each at a discount of 8%. The amount was payable as follows:
On application — Rs 2 per share
On allotment — Rs 3 per share
On first and final call — The balance
Application for 87,000 shares was received. Shares were allotted to all the applicants. A shareholder, Shyam who had applied for 1,600 shares failed to pay the allotment money and his shares were immediately forfeited. Later on, the first and final call was made. Another shareholder Ram, to whom 1,500 shares were allotted failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 2,000 shares were re-issued at Rs 9 per share as fully paid-up. The re-issued shares included all the shares of Ram.
Pass necessary journal entries for the above transactions in the books of 'Kalyan 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.
State, whether the following statements is True or False.
A public company forfeits share on non-payment of final call only.
State, whether the following statements is True or False.
Forfeited shares are reissued at par only.
X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made . The forfeited shares were reissued for ₹ 90 per share , ₹ 75 paid-up. Journalise the above.
The Hindustan Manufacturing Ltd. had a total subscribed capital of ₹ 10,00,000 in Equity Shares of ₹ 10 each of which ₹ 7.50 were called-up. A final call of ₹ 2.50 was made and all amount paid except two calls of ₹ 2.50 each in respect of 100 shares held by D . These shares were forfeited and reissued at ₹ 8 per share .
Pass necessary journal entries (including that of cash) to record the transactions of final call , forfeiture of shares and reissue of forfeited shares . Also, prepare the Balance Sheet of the company.
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.
Star Ltd. forfeited 500 Equity Shares of ₹ 100 each for non-payment of first call of ₹ 30 per share . The final call of ₹ 10 per share was not yet made. Out of these, 60% shares were reissued for ₹ 39,000 fully paid. journalise the forfeiture and reissue of shares.
A share of ₹ 100 issued at a premium of ₹ 10 on which ₹ 80 (including premium) was called and ₹ 60 (including premium) was paid, has been forfeited. This share was afterwards reissued as fully paid-up for ₹ 70 . Give Journal entries to record the above.
Pass journal entries in the following cases:
M Ltd forfeited 200 Equity Shares of ₹10 each , issued at a premium of ₹ 5 per share , held by Ram for non-payment of the final call of ₹ 3 per share . Of these , 100 shares were reissued to Vishu at a discount of ₹ 4 per share .
VT Ltd forfeited 200 shares of ₹ 10 each , issued at a premium of ₹ 5 per share , held by Mohan for non-payment of the final call of ₹ 3 per share . 100 out of these shares were reissued to Narendra at a discount of ₹ 4 per share . Journalise.
150 shares of ₹ 10 each issued at a premium of ₹ 4 per share payable with allotment were forfeited for non-payment of allotment money of ₹ 8 per share including premium. The first and final call of ₹ 4 per Pass Journal entries in the books of X Ltd. for the above.
Himalaya Company Limited issued for public subscription 1,20,000 equity shares of ₹ 10 each at a premium for ₹ 2 per share payable as under:
| With Application | --- | ₹ 3 per share, |
| On allotment (including premium) | -- | ₹ 5 per share, |
| On First call | -- | ₹ 2 per share |
| On Second and Final call | -- | ₹ 2 per share. |
Applications were received for 1,60,000 shares . Allotment was made on pro rata basis . Excess money on application were adjusted against the amount due on allotment.
Rohan to whom 4,800 shares were allotted failed to pay for the two calls. These shares were subsequently forfeited after the second call was made . All the shares forfeited were reissued to Teena as fully paid at ₹ 7 per share.
Record journal entries and show the transactions relating to share capital in the company's Balance Sheet.
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.
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.
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?
If a share of ₹ 10 on which ₹ 8 has been paid up is forfeited, it can be reissued at the minimum price of ______.
Z and Co. forfeited 100 shares of ₹ 10 each for non-payment of the final call of ₹ 2 per share. All the forfeited shares were re-issued at ₹ 9 per share. What amount will be transferred to Capital Reserve A/c?
Balance in Share Forfeiture Account is shown in the balance sheet under the head of ______.
Which of the following statement is false?
A forfeited share can ______
Based on the below information, you are required to answer the following question:
|
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 amount of share forfeiture would be reflected in the balance sheet?
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?
Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
Vipin Ltd. forfeited 10,000 shares of ₹ 10 each issued at a premium of ₹ 1 per share, for non- payment of second and final call of ₹ 2 per share. Out of these, 60% of the shares were reissued ₹ 7 per share fully paid-up.
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.
Tulip Ltd. allotted 45,000 Equity shares of ₹ 10 each to the public. The first and final call of ₹ 2 per share was not received on 1,000 shares, which were forfeited by the company. Later, 600 of the forfeited shares were reissued at ₹ 7 fully paid-up. What is the Subscribed Capital 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.
