Which days notice of demand must be issued before forfeiture of shares?
Generally, the company will give 14 days’ notice to the shareholder and after 14 days if the shareholder is not willing to pay the money due to the company will forfeit the shares of that shareholder.
What is issue and forfeiture of shares?
A forfeited share is an equity share investment which is cancelled by the issuing company. A share is forfeited when the shareholder fails to pay the subscription money called upon by the issuing company.
What is the meaning of forfeiture of shares?
Shares in publicly-traded companies that an owner loses or gives up by failing to honor certain purchase agreements or restrictions are considered to be forfeited. With forfeited shares, the shareholder no longer owes any remaining balance and is giving up any possible gain on the shares.
What entries are made for the forfeiture of shares and their re-issue?
If a share is reissued at a loss, on reissue Bank is debited with cash received, Forfeited Shares Account is debited with loss suffered (or discount allowed) and Share Capital Account is credited will the total of the two amounts which is the paid up value of reissued shares.
What is forfeiture of shares how does it different from surrender of shares?
Forfeiture of shares refers to the situation where the allotment of shares is cancelled for the shareholders due to non-payment of any installments. In contrast to that, surrender of shares takes place when shareholders return the shares to the company for cancellation.
How would you treat share forfeiture account?
Accounting Treatment for Forfeiture The balance in the Share Forfeiture A/c is shown under the Share Capital on the liabilities side of the balance sheet. This account will remain till the said shares forfeited are reissued by the company.
When can a company forfeit shares of shareholders?
Solution. When a shareholder fails to pay the allotment money or any subsequent calls, then the company informs the shareholder by giving him/her a proper notice. If after the notification, the shareholder still fails to pay the due money, then the company is allowed to forfeit the shares of such shareholders.
What is meant by forfeiture of shares explain the accounting treatment of forfeiture of shares and their reissue?
Forfeiture essentially means cancellation. Before such forfeiture is done a notice must be given to the shareholder. The notice must provide the shareholder with a minimum of 14 days to make the payment due, or his shares will be forfeited.
When all forfeited shares are not reissued?
ADVERTISEMENTS: Accounting Entries Regarding Reissue of Forfeited Shares! The forfeited shares can be reissued by the company at any price. But in no case, the amount collected on the reissue of such shares plus the amount already forfeited be less than the amount credited as paid upon reissue of shares.