Share Issue and Forfeiture Quiz

Share Issue and Forfeiture

• X Ltd. issued 10,000 shares of ₹100 each at a 6% discount.
• Application money: ₹25 per share
• Allotment money: ₹34 per share
• First & final call: ₹3 per share
• Applications received for 9,000 shares, all accepted.
• All application and allotment money collected except for the first & final call on 100 shares.
• 100 shares forfeited due to non-payment of the final call.
• 50 shares reissued at ₹90 per share as fully paid.

Journal Entries

(Note: Journal entries will vary slightly depending on the specific accounting framework followed)

• Application:

  • Bank Account Dr. (9000 x ₹25)| Share Capital Cr. (9000 x ₹25)

• Allotment

  • Bank Account Dr. (9000 x ₹34)| Share Capital Cr. (9000 x ₹34)

• Forfeiture of shares:

  • Share Capital Dr. (100 x ₹92) | Share Forfeiture Cr. (100 x ₹3)  

• Reissue of forfeited shares:

  • Bank Account Dr. (50 x ₹90)| Share Forfeiture Cr. (50 x ₹160)

• Important calculations   - The amount of ₹92 represents the total amount of money already collected for the shares that were forfeited ((₹25 + ₹34))

• The amount of ₹16 represents the total amount originally received for the shares which were reissued (₹90-(₹25 + ₹34 + ₹3)). This assumes that ₹90 is the reissued price.

Test your understanding of share issues and forfeiture in X Ltd.'s financial scenario. This quiz will cover key journal entries and calculations related to the application, allotment, forfeiture, and reissue of shares in compliance with accounting standards.