FORFEITURE OF SHARES "ACCOUNTING FOR SHARE CAPITAL"

FORFEITURE OF SHARES "ACCOUNTING FOR SHARE CAPITAL" THANKS AND REGARDS.

Transcript

00:00When unpaid shares can be taken back, let's find out how.

00:05First, what's share forfeiture?

00:09It's when a company takes back shares because the shareholder didn't pay the call money.

00:13Under the Companies Act 2013, these forfeited shares must be disclosed in the balance sheet

00:18under the equity section.

00:20Now, let's get into the accounting entries.

00:23When shares are issued at par and calls in arrear account is maintained, you debit the

00:27share capital account and credit the calls in arrear account.

00:31If calls in arrear account isn't maintained, debit share capital account and credit share

00:35forfeiture account.

00:37What about shares issued at a premium?

00:40If the securities premium is received, you debit share capital and credit both calls

00:44in arrear and share forfeiture accounts.

00:46If it's not received, you also debit the securities premium account.

00:51Easy, right?

00:53That's the quick scoop on forfeiture of shares.

00:58Thanks for watching.

00:59Don't forget to like and subscribe.

01:00See you next time.

01:01Bye.