what is forfeiture , premium, discount, shares, compay accounts, issued, financial position, etc.

1. Forfeiture of Shares -
Issued at Premium
&
Issued at Discount
COMPANY ACCOUNTING
ACM 202
Submitted By : T.Guru Aarat
142063

2. What is a share ?
Capital of a company is divided into units or
parts of equal amount. Every unit/part is called
a share.
According to Section 2(84) of the Companies
Act, a ‘share’ means a share in the share
capital of a company and includes stock.
It is an ownership security.

3. Types of Shares
 Preference Shares:
 Equity Shares:

4. What is Forfeiture of Shares ?
 If a shareholder fails to pay instalments the
shares held by him , his shares are
compulsorily forfeited as penalty and his
membership from the company is cancelled.
 After forfeiture of shares shareholder does
not have any right on the money already paid
by him on such shares.

5. Forfeiture might be of ::
1. Shares Issued At Par
2. Shares Issued At Premium
3. Shares Issued At Discount

6. Forfeiture of shares issued at
premium :
 There are 2 cases which might arise :
1. When money for premium has already been
received on forfeited shares.
2. When money for premium has not been
received on forfeited shares.

7. When money for premium has
been received on forfeited shares :
 Shares Capital a/c Dr.
To Unpaid Calls a/c
To Share Forfeiture a/c

8. When money for premium has not
been received :
 Share Capital a/c Dr.
Security Premium a/c Dr.
To Unpaid Calls a/c
To Share Forfeiture a/c

9.  Forfeiture of Shares originally
issued at discount
 This topic is irrelevant now.
 Section 53 of The Companies Act, 2013
prohibits issue of equity shares at a discount.

10. Forfeiture of Shares Issued at a
Discount :
 Share Capital a/c Dr.
To Discount on Issue Of Shares a/c
To Unpaid Calls a/c
To Shares Forfeited a/c

11. Reissue of Forfeited
Shares(a) Reissue at par :
Bank A/c Dr.
To Share Capital A/c
(Being forfeited shares reissued at par)
(b) Reissue at premium:
Bank A/c Dr.
To Share Capital A/c
To Security Premium A/c
(Being forfeited shares reissued at premium)

12. (C) Reissue at Discount :
Bank A/c Dr.
Share Forfeited A/c Dr. (Discount on
reissue)
To Share Capital A/c
(Being forfeited shares reissued at discount)
Re-issue (of shares originally issued at
discount) at a discount
 This topic is irrelevant now.
 Section 53 of The Companies Act, 2013
prohibits issue of equity shares at a discount.

13. Profit on Reissue of Shares
or Capital Reserve
Share Forfeited A/c Dr.
To Capital Reserve A/c
(Being profit on reissued shares transferred to
Capital Reserve A/c)
(1) Capital Reserve = Amount forfeited on re-issued
shares - Discount on re-issue
(2) Capital Reserve, When shares originally issued
at discount are re-issued at discount:
Capital Reserve = Amount forfeited on
reissued shares – Excess Discount on re-issue

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