X Ltd. forfieted 5 shares of rs 10 each issued at 10% premium to sham (rs 9 called up) on which he did not pay allotment (including premium) of rs 3 and first call of rs 2. Out of these 3 shares were re-issued to Ram as fully called up for rs 8 per share.
Can anybody explian me the logic of security premium credited in Re-issue
Bank Account (3 * Rs 8) Dr 24
Forfieted shares account Dr 9
To Share capital account (3 * Rs 10) 30
To Security premium account (3 * Rs 1) 3
because of all the thngs cn only possible to a company wen pemium is to be credited..........nd have a beficial also
because earlier sec. premium a/c debited at the time of forfietre...and at the time of re issued, it is assumed that they are re issud at premium....so again sec. pre. a/c credited.
at the time of forfeitre entry is, if sec. prem. not received:
share capital a/c Dr.
sec. prem. a/c Dr.
To 1st call a/c
To alloment a/c
To Share forfeiture a/c
Mr. Kanak is absolutely right. Actually those shares which are initially issued on premium, if reissued after forfeiture are assumed to be issued on premium. Hence out of Rs.8 received, Re. 1 is towards security premium/ Due to this treatment the security premium always remains in proportion to the number of shares issued. For example in this case share capital will show Rs. 30 and Security Premium account will show Rs. 3 (10% of Rs.30, share capital). I hope the whole matter is now clear.
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