Issue of shares

Meaning of a company
A Company is an artificial person ,created by law
,having separate legal entity with perpetual
succession and common seal.
Prepared by Ms Mamta Narula 2

Features of a company
1. Incorporation
Created through Process of law
(Companies Act ,2013 or under any previous
companies Acts)
2. Separate legal entity
In eyes of law
Shareholders and company are different

3. Artificial person
It can own property ,enter in to contract ,sue ,can
be sued.
4. Perpetual existence
It not affected by the death, lunancy or insolvency
of its shareholders. It can be wounded up only by
the law Prepared by Ms Mamta Narula 4

5. Limited Liability
The liability of a shareholder is limited upto the
nominal price of shares subscribed by one.
6.Transferability of shares
The shares of a company is transferable ,except
for private company

7. Management and Ownership
The company is managed by the ‘Board of
Directors’, So, management and ownership are
separate in company organization.
8. Common Seal
Company has it own common seal, which act as
the official signature of the company.

Difference
Basis Partnership Company
Regulatory
Act
Indian Partnership Act
1932
Companies Act
,2013
Minimum : 2
Maximum : 50
Number
Of
members
Public Co : Min(7) Max : Unlimited
Private Co: Min(2) Max :200
OPC : Min(1) Max :1
Profit
distribution
Unlimited Liability Limited LiabilityLiability
According to AOA or
Board of directors
According to
Partnership deed

Types of a company
Private
Company
Public
Company
One
Person
Company

Difference
Basis Private Company Public company
Transfer of
shares
Not allowed Allowed
Minimum : 2
Maximum : 200
Number
Of
members
Min : 7
Max : Unlimited
Name ends
with
Minimum : 1
Maximum : 15
Minimum : 2
Maximum : 15
Number of
directors
Ltd.Pvt. Ltd

Types of a Private
and Public company
Limited Liability
Company
Unlimited Liability
Company
Company limited
by
guarantee

What are shares
The capital of company is divided in small parts
called as shares.
Each share has some a nominal value /face value
which can be Rupee 1, 5 ,10, 50 ,100 or any
ammount

Types /classes
of shares

Types Shares
Equity
shares
Preference
Shares

Difference
Basis Equity shares Preference shares
Right to
dividend
After dividend is paid to
Preference shares
Before dividend is paid
to Equity shares
Not fixed
Decided by BOD every year
Rate of
dividend
Fixed
Repayment
Of capital
They have voting
rights
No voting rights
except under some
circumstances
Voting
rights
Paid before the payment
is made to equity shares
On winding up of
company at the end

Minimum Subscription
 The minimum amount that, in the opinion of directors, must
be raised to meet the needs of business operations of the
company
 It is to be noted that ‘minimum subscription’ of capital
cannot be less than 90% of the issued amount according to
SEBI
 If this condition is not satisfied, the company shall forthwith
refund the entire subscription amount received. If a delay
occurs beyond 8 days from the date of closure of subscription
list, the company shall be liable to pay the amount with
interest at the rate of 15%

Prospectus
 Prospectus is an invitation to the public that a new company has
come into existence and it needs funds for doing business.
 It contains complete information about the company and the
manner in which the money is to be collected from the
prospective investors.

Issue of shares
Issue of
Shares
For Cash For Consideration other
Than cash

Issue of shares
Issue of Shares
For Cash
For Consideration other Than cash
Purchase of Asset or Purchase of Business
Issue of shares to promoters
Issue of shares to Underwriters

Issue of shares For Cash
Issue price may be
payable
In
Lump sum
In Instalments
at different stages

1. X Ltd. has issued 10,000 equity shares of Rupee
10 each and whole amount is payable on
application
2. X Ltd. has issued 10,000 equity shares of Rupee
10 each and the amount is payable as follows:
 Application : Rupee 3
 Allotment : Rupee 2
 First & final Call : Rupee 5Prepared by Ms Mamta Narula 20

3. X Ltd. has issued 10,000 equity shares of Rupee 10
each and the amount is payable as follows:
 First Call : Rupee 3
 Second & final Call : Rupee 2

Types of
Share Capital
Authorised
Capital
Issued
Capital
Subscribed
Capital

Types of share Capital
1. Authorised capital
Maximum amount of share capital of company as
per Memorandum of association(MOA)
Also called as Nominal Capital
Also Called as Registered Capital
It is stated separately for each class of share
(Equity or Preference )

2. Issued capital
This is part of authorized capital which is offered
to public for subscription.
It cannot exceed authorised capital.

3. Subscribed capital
It is that part of the issued capital which has been
actually subscribed.
Shares Offered 10,000 Shares Applied 9,500
Issued Capital Subscribed Capital

Issued Capital Subscribed Capital

Issued Capital
Subscribed Capital
Is 10,000

Example
Sunrise Company Ltd., New Delhi, has registered its capital as Rs.
40,00,000, divided into 4,00,000 shares of Rs. 10 each. The company
offered to the public for subscription of 2,00,000 shares of Rs. 10 each,
as Rs. 2 on application, Rs.3 on allotment, Rs.3 on first call and the
balance on final call. The company received applications for 1,90,000
shares and shares were allotted and all money was received
Authorised Capital
Issued Capital
Subscribed Capital
4,00,000 shares of Rs. 10 each = 40,00,000
2,00,000 shares of Rs. 10 each = 20,00,000
1,90,000 shares of Rs. 10 each = 19,00,000

Types of
Subscribed Capital
Subscribed and
Fully Paid
Subscribed and
Not Fully Paid

Types of subscribed Capital
1. Subscribed and Fully paid
 The Company has called up the total nominal or
Face value of share
And
 Company has also received it
Example:
X Ltd. has issued 10,000 equity shares of Rupee 10
each and has received the amount calledPrepared by Ms Mamta Narula 30

2. Subscribed and NOT Fully paid
 The Company has called up the total nominal or
Face value of share but has not received it
And/OR
 Company has not called–up the total nominal or
Face value of share

2. Subscribed and NOT Fully paid
 Example : X Ltd. has issued 10,000 equity
shares of Rupee 10 each and has received the
amount called except Rupee 3 on 100 shares
 Example : X Ltd. has issued 10,000 equity
shares of Face value of Rupee 10 each and
company has not called final call of Rupees 2
per share Prepared by Ms Mamta Narula 32

Identify the type of subscribed Capital
I. X Ltd. has issued 20,000 equity shares of Rupee 100 each and has received the
amount called except Rupee 30 on 1000 shares
II. X Ltd. has issued 1,00,000 equity shares of Face value of Rupee 10 each and company
has received the full amount on all shares
III. X Ltd. has issued 50,000 equity shares of Face value of Rupee 10 each and has called
only Rupee 8/share
IV. X Ltd. has issued 80,000 equity shares of Face value of Rupee 100 each and has called
only Rupee 80/share and all shareholders paid the money called
V. X Ltd. has issued 10,000 equity shares of Face value of Rupee 10 each and has received
all money except one shareholder holding 50 share who did not pay final call of Rupee
3 per share

Reserve Capital
A company may reserve a portion of its uncalled
capital to be called only in the event of winding up of
the company. Such uncalled amount is called ‘Reserve
Capital’ of the company. It is available only for the
creditors on winding up of the company

Types of
Share Capital
Authorised
Capital
Issued
Capital
Subscribed
Capital
Subscribed and fully paid
Subscribed and NOT fully paid

Accounting entry
for
Issue of shares

Accounting entry for
Issue of shares
In Lump sum
Share Application & allotment A/c Dr.
To Share Capital A/c
Bank A/c Dr.
To Share Application & allotment A/c

Example
May 15 Share Application 2,00,000
& allotment A/c Dr.
To Share Capital A/c 2,00,000
April 30 Bank A/c Dr. 2,00,000
To Share Application 2,00,000
and allotment A/c
X Ltd. has issued 20,000 equity shares of Rupee 10 each payable along
with application . Applications were received for all the shares by 30th
April,2019 and the shares were allotted on 15th of May ,2019

Accounting entry for
Issue of shares
In Instalments
Equity shares of Rupee 10 each and the amount is payable
as follows:
 Second & final Call : Rupee 2Prepared by Ms Mamta Narula 39

Accounting entry for Issue of shares
In Instalments
Share Application A/c Dr.
Bank A/c Dr.
To Share Application A/c
1.On receiving application money
2.On allotment (Share money transferred to Share
Capital)

In Instalments
Share Allotment A/c Dr.
Bank A/c Dr.
To Share Allotment A/c
3.Allotment money due
4.Allotment money received

In Instalments
Share First Call A/c Dr.
Bank A/c Dr.
To Share First Call A/c
5. First call money due
6. First call money received

In Instalments
Share Second & final Call A/c Dr.
Bank A/c Dr.
To Share Second & final Call A/c
7. Second & final Call money due
8. Second & final Call money received

Example
X Ltd . Issued 50,000 Equity shares of Rupee 10 each and
the amount is payable as follows:
Public applied for the shares and paid the money due
Give journal entries

Date Particulars L.F Debit
Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
To share application A/c
( Being application money received on
10,000 shares)
30,000
30,000
Date of
allotment
(Being share application money transferred
to share capital)
30,000
30,000
Date of
allotment
( Being share allotment money due on
10,000 shares)
20,000
20,000
application 3
allotment 2
I call 3
II Call 2
10,000 shares

Amount( )
Credit
amount( )
Date of receipt
of share allotment
money
Bank A/c Dr.
To share allotment A/c
( Being allotment money received on 10,000
shares)
20,000
20,000
Date of I call Share First call A/c Dr.
(Being share first call money due on 10,000
shares)
30,000
30,000
Date of
receipt
of I call
Bank A/c Dr.
To Share First call A/c
( Being share first call money received)
30,000
30,000
application 3
allotment 2
I call 3
II Call 2
10,000 shares

Amount( )
Credit
amount( )
Date of II call Share Second & final call A/c Dr.
(Being share second & final call money due
on 10,000 shares)
20,000
20,000
Date of
receipt
of II call
Bank A/c Dr.
To Share Second & final call A/c
( Being share second & final call money
received)
30,000
30,000
application 3
allotment 2
I call 3
II Call 2
10,000 shares
One shareholder holding 500 share did not pay II Call
Date of
receipt
of II call
Bank A/c Dr.
Call in arrear A/c Dr.
received except for 500 shares)
29,000
1000
30,000

Example
Prepare Cash book and Give journal entries
Remember
All bank entries will be
done in cash book and
not in Journal

Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
10,000 shares)
30,000
30,000
Date of
allotment
to share capital)
30,000
30,000
Date of
allotment
10,000 shares)
20,000
20,000
application 3
allotment 2
I call 3
II Call 2
10,000 shares

Amount( )
Credit
amount( )
Date of receipt
of share allotment
money
Bank A/c Dr.
shares)
20,000
20,000
shares)
30,000
30,000
Date of
receipt
of I call
Bank A/c Dr.
30,000
30,000
application 3
allotment 2
I call 3
II Call 2
10,000 shares

Amount( )
Credit
amount( )
Date of II call Share Second & final call A/c Dr.
(Being share second & final call money due
on 10,000 shares)
20,000
20,000
Date of
receipt
of II call
Bank A/c Dr.
received)
30,000
30,000
application 3
allotment 2
I call 3
II Call 2
10,000 shares

Provisions relating to application and Call
1. Calls are to be made as per the provisions of the Articles of
Association(AOA)
2. Where there is no articles of association of its own, the
following provisions of Table F will apply:
(a) A period of two month must elapse between two calls;
(b) The amount of call should not exceed 25% of the face value of
the share
(c) A minimum of 14 days’ notice is given to the shareholders to
pay the amount;
(d) Calls must be made on a uniform basis on all shares within
the same class. Prepared by Ms Mamta Narula 52

Types of subscription
 Full /Normal
Subscription
 Under subscription
 Over Subscription
Shares
Offered
Shares
Applied=
Shares
Offered
Shares
Applied>
Shares
Offered
Shares
Applied
<
10,000 9,000
10,000 40,000
Prepared by Ms Mamta Narula
53

Over Subscription
February 1,
2013
Oil India share
sale got
over-subscribed
even before the
closure of
market hours
Company received
Applications for
over 7.50 Crore
shares by noon
against an offer of
over 6.01 Crore as
per data on
National Stock
Exchange.
54

Ways to deal with
oversubscription
Combination
of first two
methods
Rejection of
Excess
Applications
and Money
Returned
Pro – rata
Allotment
Excess
application
money
adjusted
towards sums
due on
allotmentPrepared by Ms Mamta Narula
55

Ways to deal with
oversubscription
Rejection of
Excess
Applications
and Money
Returned
A Company offered 40,000
shares
Applications received 60,000
sharesFull shares are allotted to
applicants of 40,000 shares
Application money on 20,000
shares returned.
56

Ways to deal with
oversubscription
Pro – rata
Allotment
Excess
application
money
adjusted
towards sums
due on
allotment
shares
shares 40,000 shares are allotted to
applicants of 60,000 shares in ratio
4:6
 Excess Application money is adjusted
towards Allotment
 Balance ,if any returned to applicants.
57

Dealing with oversubscription
Combination of
first two
methods
shares
shares 40,000 shares are allotted to applicants
of 50,000 shares in ratio 4:5
 Excess Application money is adjusted
towards Allotment .Balance ,if any
returned to applicants.
 Application money on 10,000 shares
returned
Important:
Sometimes question
requires extra money
to be adjusted
towards allotment and
calls also
58

Table
Example-1
Shares
Applied
Shares
Allotted
Application
money received
Share
Capital
Excess Share
Allotment
Return
(Bank)
3 1 2 4
60,000 40,000
10,000 0
50,000 40,000
30,000 30,000
1,50,000 1,20,000 30,000 30,000
1,80,000 1,20,000 30,000 30,000
Bank A/c Dr 1,80,000
To Share Application A/c 1,80,000
Share Application A/c Dr 1,80,000
To Share Allotment A/c 30,000
To Bank A/c 30,000
59

Preparation of Pro-rata Table
Example-2
Shares
Applied
Shares
Allotted
Application
money received
Share
Capital
Excess Share
Allotment
Return
(Bank)
4 2 3 1
1,10,000 40,000
20,000 0
90,000 40,000
80,000 80,000
3,60,000 1,60,000 2,00,000 80,000
4,40,000 1,60,000 80,000 2,00,000
To Bank A/c 2,00,000
1,20,000
60

Preparation of Pro-rata Table
Example-3
Shares
Applied
Shares
Allotted
Application
money received
Share
Capital
Excess Share
Allotment
Return
(Bank)
4 2 3 1
1,10,000 40,000
30,000 0
60,000 20,000
1,20,000 1,20,000
2,40,000 80,000 1,60,000 40,000
4,40,000 1,60,000 40,000 2,40,000
To Bank A/c 2,40,000
1,20,000
20,000 20,000 80,000 80,000
61

Terms of
Issue of Shares
Shares can be
issues
At
PAR
AT
PREMIUM
Share of Face value Rupee 10 is issued
at 10
Share of Face value Rupee 10 is issued
at 12
Prepared by Ms Mamta Narula62

Shares can be
issues
At
PAR
AT
PREMIUM
Share of Face value
Rupee 10 is issued at 12
 Here premium money is Rupee
2
 It is called as
Securities Premium Reserve

Provisions relating to utilisation of Securities
Premium Reserve account
1. Issue fully paid bonus shares
2. Write-off preliminary expenses of the company
3. Write-off the expenses of, or commission paid, or discount
allowed on any securities of the company
4. Pay premium on the redemption of preference shares or
debentures of the company.
5. Purchase of its own shares (i.e., buy back of shares).
Section 52(2) of Companies Act 2013

ISSUE OF SHARESAT PREMIUM
Shares are issued At premium to the public by well
managed and financially strong companies
through the IPO.
Called Value > Face Value
This Premium can be called with any
installment like (Application , Allotment,1st Call,2nd
Call ..... Or partially at different stages)
In absence of information the amount of Premium
is to be recorded at the time Allotment

Example
X Ltd . Issued 50,000 Equity shares of Rupee 10 each at a
premium of Rs. 3 and the amount is payable as follows:
 Allotment : Rupee 5(including premium)
Premium with allotment
money

Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
10,000 shares)
30,000
30,000
Date of
allotment
to share capital)
30,000
30,000
Date of
allotment
To Securities Premium Reserve A/c
10,000 shares)
50,000
20,000
30,000
application 3
allotment 2+3
I call 3
II Call 2
10,000 shares

Amount( )
Credit
amount( )
Date of receipt
of share allotment
money
Bank A/c Dr.
shares)
50,000
50,000
shares)
30,000
30,000
Date of
receipt
of I call
Bank A/c Dr.
30,000
30,000
application 3
allotment 2 +1
I call 3 +2
II Call 2
10,000 shares

Example
 Allotment : Rupee 3 (including premium Rs. 1)
 First Call : Rupee 5 (including premium Rs. 2)
Premium with allotment
& First call

Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
10,000 shares)
30,000
30,000
Date of
allotment
to share capital)
30,000
30,000
Date of
allotment
10,000 shares)
30,000
20,000
10,000
application 3
allotment 2+1
I call 3 +2
II Call 2
10,000 shares

Amount( )
Credit
amount( )
Date of receipt
of share allotment
money
Bank A/c Dr.
shares)
30,000
30,000
shares)
50,000
30,000
20,000
Date of
receipt
of I call
Bank A/c Dr.
50,000
50,000
application 3
allotment 2 +1
I call 3 +2
II Call 2
10,000 shares

Example
 Application : Rupee 6(including premium Rs. 3)
Premium with application
money

Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
10,000 shares)
60,000
30,000
Date of
allotment
to share capital)
60,000
30,000
30,000
Date of
allotment
10,000 shares)
20,000
20,000
application 3+3
allotment 2
I call 3
II Call 2
10,000 shares

Calls in Arrear
Calls in advance

Difference
Basis Calls in Arrear Calls in advance
Meaning
Amount called up by
company but not paid by
shareholders
Amount not called by
company but paid by
shareholders
Charged by companyInterest Allowed by company
Disclosure in
Balance sheet
As per Table F
10%
As per Table F
12 %
Rate of
Interest
Current Liability
Subtracted from
Subscribed and not
fully paid CapitalPrepared by Ms Mamta Narula 75

Example
 First & final Call : Rupee 1
except one shareholder who did not pay final call on 500
shares held by him .Give journal entries

Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
10,000 shares)
30,000
30,000
Date of
allotment
to share capital)
30,000
30,000
Date of
allotment
10,000 shares)
40,000
40,000
application 3
allotment 4
I call 1
500
10,000 shares

Amount( )
Credit
amount( )
Date of receipt
of share allotment
money
Bank A/c Dr.
shares)
40,000
40,000
shares)
10,000
10,000
Date of
receipt
of I call
Bank A/c Dr.
Calls in arrear Dr.
( Being share first call money received
except on 500 shares)
9500
500
30,000
10,000 shares
application 3
allotment 4
I call 1
500

Example
 First & final Call : Rupee 1
except one shareholder paid final call on 500 shares with
allotment. Give journal entries

Amount( )
Credit
amount( )
Date of
application
Bank A/c Dr.
10,000 shares)
30,000
30,000
Date of
allotment
to share capital)
30,000
30,000
Date of
allotment
10,000 shares)
40,000
40,000
10,000 shares
application 3
allotment 4
I call 1
500

Amount( )
Credit
amount( )
Date of receipt
of share allotment
money
Bank A/c Dr.
To Calls in advance
shares along with advance)
40,500
40,000
500
shares)
10,000
10,000
Date of
receipt
of I call
Bank A/c Dr.
Calls in advance Dr.
9500
500
10,000
10,000 shares
application 3
allotment 4
I call 1
500

Forfeiture Of shares
If a shareholder fails to pay allotment money or a call or a part thereof by
the last date fixed for payment
The Board of Directors, if Articles of Association of the company empower it
to do so, proceed to forfeit (cancel) the shares
 A notice has to be served on the defaulter requiring him to pay the unpaid
amount together with interest accrued by a certain date.
 When shares are forfeited, the shareholder’s name is removed from the
register of members and the amount already paid by him on shares is not
returned by the company.
 These forfeited share may later be reissued

Forfeiture of Shares
Shares can be issued
At
PAR
AT
PREMIUM
Premium money received
Premium money NOT received

Share Capital A/c Dr
To Share Forfeiture A/c
To calls in arrear A/c
At
PAR
(Number of shares forfeited X Called up
amount )
(Number of shares forfeited X amount
already received )
NOT received )

Example -A1
X Ltd . Issued 50,000 Equity shares of Rupee 10 each
payable as follows:
Public applied for the shares and paid the money due except
one shareholder holding 100 shares failed to pay first and
second call .His shares were forfeited .
Cancelle
d after
Second
and final
call
Called
up
amount
10

Journal entry
100 X 10
100 X 6
100 X 4
4 2 1 3
1000
600
400
To Share I call A/c 100
To share II & final call A/c 300Prepared by Ms Mamta Narula86

Example-A2
payable as follows:
one shareholder holding 100 shares failed to pay allotment
and first call .His shares were forfeited .
Cancelle
d after
First call
Called
up
amount
7

Journal entry
100 X 7
100 X 4
100 X 3
4 2 1 3
700
400
300

Example-A3
payable as follows:
one shareholder holding 100 shares failed to pay allotment
and his shares were forfeited .
Cancelle
d after
allotment
Called
up
amount
6

Journal entry
100 X 6
100 X 4
100 X 2
4 2 1 3
600
400
200

At
PAR
AT
PREMIUM

At
Premium
amount )
already received )
NOT received )
IGNORE Premium received

Example- B1
premium of Rs 2 payable as follows:
 First Call : Rupee 1+2
one shareholder holding 100 shares failed to pay second
and final call .His shares were forfeited .
Cancelle
d after
Second
and final
call
Called
up
amount
10

Journal entry
100 X 10
100 X 6
100 X 4
4 2 1+2 3
1000
700
300
If Premium
is received
Ignore
Premium

Securities Premium reserve A/c Dr
At
Premium
amount )
already received )
NOT received including premium)
Premium money is NOT
received
(Number of shares forfeited X premium
money
not received)

Example- B2
 First Call : Rupee 1+2
one shareholder holding 100 shares failed to pay first and
second & final call .His shares were forfeited .
Cancelle
d after
Second
and final
call
Called
up
amount
10

Securities Premium Reserve A/c Dr.
Journal entry
100 X 10
100 X 6
100 X 6
4 2 1+2 3
1000
600
600
Premium
is not
received
100 X 2 200

Example-C1
 Allotment : Rupee 2 +1
one shareholder holding 100 shares failed to allotment and
first call .His shares were forfeited .
Cancelle
d after
First call
Called
up
amount
7

Journal entry
100 X 7
100 X 4
100 X 4
4 2+1 1 3
700
400
400
Premium
is not
received
100 X 1 100

Example-C2
one shareholder holding 100 shares failed to allotment .His
shares were forfeited .
Cancelle
d after
Allotment
Called
up
amount
6

Journal entry
100 X 6
100 X 4
100 X 3
4 2+1 1 3
600
400
300
Premium
is not
received
100 X 1 100

Reissue Of forfeited shares
 These forfeited share may later be reissued
 Forfeited shares may be reissued at a par, premium, discount
 Maximum Discount on Reissue
It may be noted that the amount of discount allowed cannot exceed the
amount that had been received on forfeited shares at the time of initial issue
4 2 1 3 Example
One shareholder holding 100 shares failed to pay first and Second & final call
.His shares are forfeited and later Reissued at Discount .What will be the
maximum discount ?
Solution : Maximum discount is Rs. 6 (i.e. the amount already received )
So Share can be reissued at Minimum Rs. 4 /share and not less than that .Prepared by Ms Mamta Narula 102

Reissue of Shares
Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
Shared are reissued at Rs . 6 /share
fully paid up
Rs. 8 paid up
fully paid up
Rs. 6 paid upPrepared by Ms Mamta Narula 104

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
Rs. 6 paid up
Rs. 8 paid up
fully paid up
Rs. 10 paid upPrepared by Ms Mamta Narula 105

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
Rs. 8 paid up
Rs. 10 paid up
Rs. 6 paid up
Rs. Fully paid up

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
fully paid up
Bank A/c Dr
Share Forfeiture A/c Dr
100 X 6
100 X 4
100 X 10
600
400
1000

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
fully paid up
Bank A/c Dr
100 X 12
100 X 2
100 X 10
1200
200
1000

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
fully paid up
Bank A/c Dr
100 X 10
100 X 10
1000
1000

Reissue of shares
At
PAR
At
PREMIUM
AT
DISCOUNT
Bank A/c Dr
Number of share reissued X Reissued amount
Number of share reissued X Paid up value
If Dr. side short
Share Forfeiture A/c
If Cr. side short
Securities Premium
Reserve A/c Prepared by Ms Mamta Narula 110

Bank A/c Dr
800 X 6
800 X 4
800 X 10
4800
3200
8000
800 shares were reissued as fully paid for Rs 6 per share. Journalise
Example-D1

Bank A/c Dr
60 X 7
60 X 1
60 X 8
420
60
480
60 shares were reissued at Rs. 7 per share, as Rs. 8 paid up, Journalise
Example-D2

50 X 12
50 X 2
50 X 10
600
100
500
50 shares were re-issued @ Rs. 12 per share, fully paid up. Journalise
Example-D3
To Securities premium
reserve A/c Dr
Bank A/c Dr

Combined question of
Forfeiture and Reissue

At
PAR
AT
PREMIUM
Reissue of
shares
At
PAR
At
PREMIUM
AT
DISCOUNT
Forfeiture of Shares Reissue of Shares

Example-E
X Ltd . Issued 50,000 Equity shares of Rupee 10 each payable as follows:
Public applied for the shares and paid the money due except one shareholder
holding 100 shares failed to first and second & final call .His shares were
forfeited .
These shares were later reissued at 6 per share fully paid .
Give journal entry for forfeiture and reissue

4 2 1 3100
shares
Reissued at 6 per share fully paid
1000
600
400
Bank A/c Dr
600
1000
400
To Capital Reserve A/c
200
200

Example-F
X Ltd . Issued 50,000 Equity shares of Rupee 10 each payable as follows:
holding 100 shares failed to pay allotment and first call .His shares were
forfeited .
These shares were later reissued at 8 per share Rs.5 paid up.
Give journal entry for forfeiture and reissue

2 3 1 4100
shares
Reissued at 8 per share Rs.6 paid up
600
200
400
Bank A/c Dr
To securities premium
Reserve A/c
800
600
200
200
200

Example- G
X Ltd . Issued 50,000 Equity shares of Rupee 10 each at premium of Rupee
2 payable as follows:
holding 100 shares failed to pay allotment and first call .His shares were
forfeited .
These shares were later reissued at 5 per share Rs.6 paid up.
Give journal entry for forfeiture and reissuePrepared by Ms Mamta Narula 120

2 3+2 1 4100
shares
Reissued at 5 per share 6 paid up
Securities premium Reserve Dr.
600
200
600
Bank A/c Dr
500
600
100
100
100
200

If all Forfeited shares are
not reissued

Example-H
X Ltd . Issued 50,000 Equity shares of Rupee 10 each at premium of Rupee
2 payable as follows:
 Allotment : Rupee 3+2
holding 100 shares failed to pay second and final call .His shares were
forfeited .
50 of these shares were later reissued at 7 per share Rs.fully paid up.
Give journal entry for forfeiture and reissuePrepared by Ms Mamta Narula 123

2 3+2 1 4100
shares
50 shares Reissued
at 7 per share fully paid up
1000
600
400
Bank A/c Dr
350
500
150
150
150
100 shares
50 shares
Working note:
For 100 shares forfeiture A/c = 600
For I share forfeiture A/c = 600/100= 6
For 50 shares ,forfeiture A/c = 6 X 50= 300
Less 150
= 150

Issue of shares

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Issue of shares