B3 Forfeiture of shares

Forfeiture of shares means

1. Cancellation of the membership of the share holder.i, e cancellation of share capital called upon the shares forfeited.
2. Forfeiture of whatever amount paid by the share holder in account of the share s forfeited.

For bringing forfeited shares into effect in the books of account the following steps are needed.
a. The credit given to the share capital account to be debited with the amount of share capital called up in respect of those shares.

b. The debits in the allotment, call account etc. Should be cancelled, for this the respective accounts should be credited with the amojnts due from share holders,

C, the amount already received from the shareholder is forfeited and transferred to shares forfeited account.