Accounting For Share Capital - Explanation and Illustration 37 | Class 12 Accountancy Chapter 8
Magnet Brains・2 minutes read
When a shareholder fails to pay calls for shares, the company can forfeit the shares without refunding the money, following a specific procedure and accounting treatment. Tracking unpaid amounts through calls in arrears account is essential, with examples provided for different scenarios and general entries for accounting processes, emphasizing consistent learning for exam preparation.
Insights
- Forfeiting shares involves canceling them without refunding the allotted money, requiring a notice to the shareholder and adherence to the company's articles of association. The accounting treatment includes debiting the share capital by the called-up value, with no refund of the amount received towards share capital and premium.
- Understanding the accounting treatment for non-payment of calls requires tracking the money requested, received, and outstanding, with entries involving debiting the requested amount, crediting the called-up share capital, and debiting the unpaid amount in calls in arrears account. Various scenarios, such as issuing shares at no premium or with a premium, necessitate meticulous accounting practices, emphasizing the importance of consistent learning to alleviate exam stress and access available resources for clarification.
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Recent questions
What is the procedure for forfeiting shares?
The procedure for forfeiting shares involves giving notice to the shareholder and following the articles of association.
How is the accounting treatment for forfeited shares done?
The accounting treatment for forfeited shares involves debiting the share capital from the called-up value.
What is the purpose of maintaining a calls in arrears account?
Maintaining a calls in arrears account helps in tracking and collecting unpaid amounts.
How can one determine the accounting treatment for non-payment of calls?
To determine the accounting treatment for non-payment of calls, one must calculate the amount requested, the amount received, and the amount outstanding.
What are the different scenarios for issuing shares and their accounting treatment?
The different scenarios for issuing shares include issuing shares at no premium, issuing shares at a premium with the premium received, and issuing shares at a premium without receiving the premium.
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