These online mcq tests includes all main concepts of the issue, forfeiture and reissue of shares in ca cpt fundamentals of accounting. The forfeited shares can be reissued by the company at any price. May 16, 2018 on this page, i am sharing the class 12th notes and ebook on the topic reissue of forfeited shares of the subject accounts. Out of these, 15 shares were reissued to naresh as. But in case, only part or forfeited shares are reissued and the remaining forfeited shares are cancelled then the remaining amount will be in share forfeited ac only.
But the discount on re issue should not exceed the amount forfeited. The share may also be reissued at a premium, par value or discount. Accounting treatment for reissue of forfeited shares accounting. If the articles permit, company can re issue the forfeited shares at par or at premium or at a discount. The board of directors of the company is empowered to reissue the forfeited shares if authorized by its articles. 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 account. Forfeited shares can be reissued at any price the company prefers. A company may re issue the forfeited shares at any time it likes. If forfeited shares are reissued at a discount, the amount of discount can, in no case, exceed the amount credited to shares forfeited account. The fixed value of a share, printed on the share certificate, is called nominal par face value of a share. While reissuing the forfeited shares the company should fix the price of reissue such that the total amount received in respect of the shares i. 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. Accountancy mcqs for class 12 with answers chapter 7 issue.
Accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares 1. 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. Reissue forfeiture of shares case 2 when shares are reissued at 29. The board then passes a formal resolution to forfeit the shares. May 15, 2014 practice questions issue, forfeiture, reissue and valuation of rights 1. Reissue of forfeited shares share forfeiture ac 30.
Discount thus allowed on reissue has to be debited to shares forfeited account. The amount of discount allowed is debited to share forfeited account. Such shares once forfeited can be reissued to any person within reasonable time and at reasonable price. The company auctions the forfeited shares and disposes them off. Issue, forfeiture and reissue of shares 3 mcq to study with solutions a complete question bank. Notes on share forfeiture and reissue of forfeited shares. On 21 april 2003, the forfeited shares were reissued as fully paid for a consideration of 90c per share.
Short particulars of reissued shares will be advised to the stock exchange concerned. Forfeiture and reissue of shares advanced corporate. 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. The profit on reissue of forfeited shares is transferred to. Before selling the forfeited shares, keep ready a duly verified declaration in writing signed by the director, manager or secretary of the company stating that the shares of the company have been forfeited on a particular date. Reissue of forfeited shares accounts class 12 notes, ebook. Discuss the law relating to forfeiture of shares and the. The auditor should ascertain whether the articles authorize the board of directors to reissue the forfeited shares. If all the forfeited shares have not been reissued, forfeited shares account will show a credit balance equal to gain on forfeiture of the shares not yet reissued.
Reissue of forfeited shares part 1 important for ugc net. 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. Oct 18, 2015 issue, forfeiture and re issue of shares by n. Discount on reissue to share capital ac being forfeited shares reissued at discount reissue of shares originally issued at discount at a discount this topic is irrelevant now. After reissue of forfeited shares, balance amount of share forfeiture ac is transferred to capital reserve ac because it is a capital profit. If any shareholder is not able to pay the amount of call, the company may exercise the power to forfeit his shares. Reissue of forfeited shares at premium and at par, originally issued at par. When the shares forfeited are reissued at discount, bank account is debited by the amount received and share capital account is credited by the paid up amount. According to section 284 of the companies act, 20 share means a share in the share capital of a company and includes stock.
If the discount allowed on reissue of shares is less than the forfeited amount. 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. Reissue of forfeited shares initially issued at premium and partially called up illustration 8. Accountancy mcqs for class 12 chapter wise with answers pdf download was prepared based on latest exam pattern. An applicant to whom 40 shares were allotted, failed to pay the amount due on the first and final call and his shares were forfeited on 31st oct. Issue, forfeiture and reissue of shares 3 for ca foundation helps you for every ca foundation entrance exam. Again, the amount of discount on reissue cannot exceed amount forfeited on shares. Nov 17, 2010 a person to whom forfeited shares have been reissued is governed by the terms of reissue.
Auditors duty regarding reissue of forfeited shares. Re issue of forfeited shares forfeited shares become the property of the company. Forfeiture of shares and its effects an analysis ipleaders. Dec 07, 2016 forfeiture and reissue of shares by commerce expert duration. The auditors duty as to the reissue of forfeited shares is described as follows.
Reissue of forfeited shares requirements of companies. Manoj comes and pleads with the company to cancel the forfeiture of shares after the reissue of the forfeited shares to mr. Journal entry bonus to dr shareholders ac share capital ac cr share premium ac cr being bonus utilised for issue of bonus shares at premium forfeiture and reissue 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. Accounting entries regarding reissue of forfeited shares. Journalise the entry for reissue of shares whether at discount or at premium.
His her title is not affected by any irregularity in the proceedings with reference to the forfeiture, sale or disposal of the share. Issue forfeiture of shares financial capital capital. When the reissue is without any stipulation as to the outstanding calls, the new allottee cannot be held liable for the previous calls and interest on the overdue amount and his shares cannot be forfeited on that ground. Reissue of forfeited shares requirements of companies act. Reissue of forfeited shares is not allotment of shares but only a sale.
The ownership of a company is broken into units we know as shares. School of distance education corporate accounting page 1 university of calicut school of distance education b com 2011 admission onwards. May 02, 2016 shares issued for consideration other than cash sometimes a company purchases some assets from the vendor and instead of paying the vendor in cash, the company may decide to issue shares to vendors is known as issue of shares for consideration other than cash shares can be issued to vendors at par, premium. Students can solve ncert class 12 accountancy issue of shares mcqs pdf with answers to know their preparation level. Forfeiture of shares conditions procedure annulment. Sometimes on nonpayment of call money, we see forfeiture and reissue of shares. Regarding reissue of forfeited shares accounting entries. The forfeited shares are generally issued at a price lesser than their face value. Company accounts and analysis of financial statements.
This chapter deals with the accounting for share capital of companies. Introduction to forfeiture and reissue of shares 2. Reissue of forfeited shares at premium and at par, originally. Prepare journal entries in general journal form to record the above transactions. When shares are reissued, return of the forfeited shares. Jun 28, 20 28 june 20 hi reissue 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. Reissue of shares 3 understand the concept and accounting treatment of callinarrears and callinadvance. As in the absence of any provisions to the contrary, provisions of table a apply. Journal entries on forfeiture or surrender and reissue of shares 3. Share forfeiture ac dr to capital reserve ac when shares are reissued at premium, premium on reissue is transferred to share premium ac.
In this connection the following points need to be noted. 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. The following are the requirements of the companies act regarding the reissue of forfeited shares. But, the company can forfeit shares only if the article of association of the company allow forfeiture. Shares issued at premium a company is allowed to issue shares at premium the amount of premium is transferred to share premium ac the share premium amount can be utilized in writing off preliminary expenses for issue of shares as fully paid bonus shares for premium payable on redemption of preference shares in writing off any discount. The shares may be disposed of and resold at discount the discount must not exceed the actual amount forfeited on the shares. A company can reissue these shares at any price but the total amount received on these shares should not be less than the amount in arrears on these shares. They may be cancelled or re issued for any price they will fetch, but the amount of discount cannot exceed the actual, amount forfeited on these shares, otherwise it would amount to issue of shares at a discount which is prohibited under section 53. Reissue of forfeited shares accounts class 12 notes. Accounting entries for reissue of forfeited share transaction entry 1. In this lesson, you will learn how to solve a question when a company reissue forfeited shares. Ideal cpt accounts issue, forfeiture and reissue of shares 207 calculation of profit on reissue of forfeited shares.
A forfeited share is a share in a company that the owner loses forfeits by failing to meet the purchase requirements. Entry for reissue of forfeited shares at discount will be. Ts grewal accountancy class 12 solutions chapter 8. In this article we will discuss about the accounting treatment for reissue of forfeited shares, explained with the help of suitable illustrations. But the discount so allowed to the new buyers should not exceed the amount already paid by the defaulting member. It is a capital gain and is credited to forfeited shares account. But the loss on reissue cannot exceed the gain on forfeiture of the share reissued. The directors of a company have the right to reissue the shares that were forfeited by them already as and when they find it suitable and convenient. If all forfeited shares are reissued then share forfeited ac will be zero after the transfer of share forfeited amount to capital reserve ac. Apr 02, 2020 forfeiture and reissue of shares advanced corporate accounting b com notes edurev is made by best teachers of b com. Requirements may include paying an allotment or call money. This document is highly rated by b com students and has been viewed 1112 times. Reissue of forfeited shares at par, at discount and at premium.
Capital funds provided by the owners into a business is known as capital. Forfeiture of shares problems and solutions accountancy. Reissue of forfeited shares is a mere sale of shares for the company. This contains 40 multiple choice questions for ca foundation test.
Solved illustrations on forfeiture and reissue of shares. Deal with the forfeiture of shares issued with different conditions. Forfetire and reissue of shares 10 note a public limited company cannot make any allotment of shares unless the amount of minimum subscription stated in the prospectus has been subscribed and the sum payable as application money for such shares has been paid to and received by the company. The profit on reissue of forfeited shares is transferred. Accountancy mcqs for class 12 with answers chapter 7 issue of. Accountancy mcqs for class 12 chapter wise with answers pdf download was prepared based on latest exam. Proprietor sole proprietor partnership partners company. The share, after forfeiture, in the hands of the company is subject to an obligation to dispose it of. Dec 23, 2019 free pdf download of cbse accountancy multiple choice questions for class 12 with answers chapter 7 issue of shares. Forfeited shares may either be cancelled or reissued. Issue, forfeiture and reissue of shares online tests for ca cpt fundamentals of accounting. Easy way commerce classes by tabita massey 4,536 views. Free pdf download of cbse accountancy multiple choice questions for class 12 with answers chapter 7 issue of shares.
Practice questions issue, forfeiture, reissue and valuation. In this article we will discuss about the forfeiture and reissue of shares. Accounting for share capital class 12 accountancy extra questions. After the forfeiture of shares, if the defaulting shareholder likes to pay the amount due and requests the company to cancel the forfeiture of his shares, the secretary should take the following steps.
Accounting for share capital class 12 accountancy extra. Oct 09, 2017 reissue of forfeited shares company ac. In this case the total amount received on reissue of shares that has been credited to share forfeited ac will be transferred to capital reserve ac. Reissue of forfeited shares is not allotment of shares but fundamentals of accounting. These shares represent a part of the company, so the shareholder becomes a part owner. However, the amount receivable on reissue of such shares together with the amount already received from the defaulting member, shall not, in any case, be less than the face value of the shares. Record the journal entries for forfeiture and reissue of shares in the following cases. In such a case, the entire amount standing to the credit of shares forfeited account for those shares would be treated as net gain and transferred to capital reserve account. 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. 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.
Aug 26, 2017 forfeited shares can be issued at a discount and is not governed by section 53. The directors of the company have the authority to reissue the forfeited shares in accordance with the provisions contained in articles of association or such terms directors find it suitable. Forfeiture of share means the cancellation of the shares for nonpayment of calls due. When the forfeited shares are reissued at a discount, the amount of discount should not exceed the amount credited to share forfeited account. Section 53 of the companies act, 20 prohibits issue of equity shares at a discount. If a shareholder fails to pay allotment money or a call or. A forfeited share is merely a share available to the company for sale and remains vested in the company for that purpose only. Credit balance of forfeited shares cannot be considered a surplus until the shares forfeited have been re issued, dr.
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