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Unit 3: Reissue of Forfeited Shares and Bonus Issue

Bank Account (150 × 40) Dr. 6,000 Notes
Forfeited Share Account Dr. 2,100
To Share Capital Account (150 × 50) 7,500
To Share Premium Account (150 × 4) 600
(Being reissue of 150 share @ 40 per share)
Forfeited Shares Account Dr. 1,500
To Capital Reserve Account 1,500
(Being profit on reissue of 150 shares transferred to capital
6, 000
reserve i.e. ´ 150  2,100)
250
Bank Account (50 × 60) Dr. 3,000
To Share Capital Account (50 × 50) 2,500
To Share Premium Account (50 × 10) 500
(Being reissue of 50 shares for 60 per share)
Forfeited Share Account Dr. 1,200
To Capital Reserve Account 1,200
(Profit on reissue of 50 forfeited shares transferred to
6, 000
capital reserve a/c i.e., ´ 50)
250
Bank Account (50 × 25) Dr. 1,250
Forfeited Shares Account (50 × 25) Dr. 1,250
To Share Capital Account (50 × 50) 2,500
(Being reissue of 50 shares for 25 each.)

Self Assessment

Fill in the blanks:
1. As per the .............................., directors are empowered to reissue the forfeited shares when
they find it suitable.

2. The directors can reissue the ....................... shares at any price which they like.
3. ........................... will not be recorded again on the reissue of shares if already recorded.
True or False:
4. The reissue price of forfeited share plus the amount already received on these forfeited
shares from defaulters cannot be less than the amount credited as paid up on reissue of
shares.

5. If the forfeited shares, which were previously issued at discount, are reissued at discount
"Discount on Issue of Shares Account" will not be re-recorded with the proportionate
amount the shares reissued.
3.2 Forfeiture and Reissue of Shares in the Case of

Over-Subscription and Pro-rata Allotment

If a company has a reputation in the market, there is a possibility that shares applied for would
be more than what the company proposes to issue. In such a condition it is not possible for a
company to allot shares to the all applicants, therefore, the company rejects some applications
altogether, allots in full to some applicants and makes a pro-rata allotment to the remaining
applicants.

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