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Forfeiture of Shares : Amt to be Trf to Capital Reserve

sachin v (abc) (82 Points)

30 May 2008

Please clear what amt is to be trfd to Capital Resere and Journal Entry for the same.

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11 Replies

Shekar (CA & LCS ) (1109 Points)
Replied 30 May 2008

Hi..

If any surplus is left over in Forfeiture a/c even after filling of gap between Reissue price and paid up price of forfieted shares...then such amt can be transferred to Capital Reserve...

Example..If a share of Rs.10 was forfeited on non-payment of final call money of Rs.2..the paid-up value of share of Rs.8 (10-2) will be transferred to Share forfeiture a/c..if tht share is reissued for Rs.6..then Rs.4 from Share forfeiture a/c has to used to fill the gap as to make the share equal to Rs.10(original face value).Now Remaining balance of Rs.4(8-4) in Forfeiture a/c has to transferred to Capital reserve..

Journal entry is:

SHARE FORFEITURE A/C DR

To CAPITAL RESERVE A/C

3 Like

yogeshwar (chartered accountant) (137 Points)
Replied 30 May 2008

if part of shares forfeited are reissued then prportionate amount of shares forfeited will be calculated and loss on reissue of those forfeited shares will be deducted and balance will be transferred to capital reserve

M.Sriram Shenoy (CA Final) (814 Points)
Replied 30 May 2008

I agree with Mr.Shekar sir.!!!!!!!!

sachin v (abc) (82 Points)
Replied 30 May 2008

Dear Mr Shekhar,

Thanks a TON for ur rely.

i am finding difficulty if there are two defaulter say of 1000 and 1000 (Face Value - Rs. 10) shares of Rs. 3/- Non Payment for Ist and Rs. 4/- for 2nd and we re-issue 1500 Shares and get Rs. 8/- per share of face value of Rs. 10/- then what amount would go to Cap Reserve.

Shekar (CA & LCS ) (1109 Points)
Replied 30 May 2008

In tht case...u have to calculate seperately for each case....u have to see how many of 1st case shares and how many of 2nd case shares were reissued....and calculate the amount to br transferred to capt resereve....

Hope ur doubt is clear....

1 Like

(Guest)

If a call have premium or Discount and these calls are Forfeited then how can Make a Journal Entry in the Book of Company?

Sudhanshu (student) (22 Points)
Replied 03 June 2011

under which section of the companies act is this fact written?

CA Gyati Gupta (In Practice) (8227 Points)
Replied 17 October 2015

what in case if shares are not resissued ? What should be the treatment of the amount lying to the credit of shares forfeited account ?

VASU GUPTA (student) (22 Points)
Replied 02 June 2016

if shares are not reissued than the amt will remain share for

VASU GUPTA (student) (22 Points)
Replied 02 June 2016

if shares are not REISSUED than the amt will remain in Share forfeiture account and will be added in notes to accounts of Share capital in balance sheet

Althaf Kakkat (2 Points)
Replied 05 February 2017

Sir, What to do if the share was issued on premium of Rs.2/share on allotment and was not paid, Thus forfeitured ?(The forfeiture was made after receiving the application, Allotment money was not received)