Re-Issue of Forfeited Shares – At a Premium

If forfeited shares are re-issued at a premium, the amount of such premium should be credited to Securities Premium Account. In such a case also, the entire amount standing to the credit of Shares Forfeited Account would be treated as net gain and transferred to Capital Reserve Account.

 

JOURNAL ENTRIES

1. On re-issue of shares:
‘

Bank                                                                                                                                    Dr.                                                 (with the total amount received on reiissue.)

                    To Share Capital A/c                                                                                                                                          (with nominal value or paid-up value of shares.)
To Securities Premium A/c                                                                                                                                 (with the premium amount received.)

 

2. On transfer of Shares Forfeited A/c to Capital Reserve A/c:

 

Shares Forfeited A/c                                                                                                      Dr.                                                       (with the forfeited amount on shares re-issued)
To Capital Reserve A/c