Forfeiture of shares issued at Premium | Issue of Shares | Class 12 Share Capital | Forfeiture

Understand how to record the Forfeiture of shares issued at Premium for Class 12 Share Capital topic.
Before the corporation may foreclose on a defaulting shareholder, it must provide that person 14 days' notice that he must pay the overdue sum, plus interest. Shares will be cancelled if payment is not received by the due date. However, if the shareholder still does not pay, the business might vote for a resolution to forfeit the shares. In case of a forfeiture, they must cancel the shares, and the Share Capital is reduced accordingly. The business does not give back the money it has taken in. The amount in the share forfeiture account is transferred to Paid-Up Capital in the Notes to Accounts on 'Share Capital' until the forfeited shares are reissued.
In the Event of a Forfeiture of Shares Journal Entry Must be Made:
Share Capital A/c Dr. (Called up capital)
Sec Premium A/c Dr. (Premium not received)
To Calls in arrear (Defualt)
To Sh. Forfeiture A/c (Amount Recd from Shareholder)
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CA Manish Mahajan is a first class commerce graduate from Panjab University, having done his graduation in B.Com (Finance Hons.) from GGDSD College, Chandigarh. He qualified Chartered Accountancy course in 2010 and was placed in merit list (31st All India Rank in Final and 22nd All India Rank in Foundation). He possesses a vast experience of more than 18 Years in teaching Accountancy, Economics and Mathematics to the students of Classes +1 and+2 and also mentored the students of B.Com and CA. He has authored the books on Accountancy, Economics and Indirect Tax Laws. His unique lecture delivery and practical method of teaching, helps the student to easily grasp and remember the subject.
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