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.

B3 Definitions

Authorized capital
The total or maximum amount of capital which the company authorized to raise

Called up capital
The total allotment of capital which the share holders are called upon to pay

Calls in Advance
The excess money paid by the share holders in respect to the share s alloted to him over and above what is payable before he is called upon to pay.

Calls in Arrears
The amount though called up the directors, the shareholders have failed to pay and thus in arrears.

Call money
When the directors inform thr shareholders to pay a apart of the share amount through a letter,  it is said that a call has been made, the amount payable on such a call is called as call money.

B3 proforma Entries

Transaction and Entry

1.When share application money is received.

1.Bank account to share application account

2. On allotment o shares
A) For transfering share application money in respect of applications accepted
2a.Share application account to share capital account

B ) for allotment money due on allotment of shares
2b.Share allotment account to share capital account

3. On receipt of allotment money

3,Bank account to share allotment account

4. On making calls
A) for call money due on call
4a,Share call account to share capital account
B) on receipt of call money
4b.Bank account to share calls account

B3 Sources of Bonus shares

1. Share premium
2. Capital redemption reserve
3.General reserve
4.profit and loss account credit balance
5.capital profits such as profit prior to incorporation, profit on purchase of business,  profit on sale of fixed assets etc and
6. Any other reserves accumulated out of profits.

B3 Objects of issuing Bonus Shares

1. To conserve the cash resources of the company
2. To present a proper figure of share capital with which profits can be compared
3. To offer capital gain to share holders.

Company issue bonus shares at the following circumstances-
1.when the company has accumulated large reserves,
2, when the company has expended such reserves in revenue producing assets and when it is not in a position to give cash bonus.
3, when there is a wide gap between the share capital and fixed assets. When the company is under capitalized.

B3 Bonus Shares

Bonus shares are those shares which are issued without any payment to the share holders. They are issued out of reserves, both capital and revenue. The process of issuing bonus shares is also known as capitalization of reserves.

B3 Realisation Account

It is the account which will be opened to close the business in he vendor company.

B3 AMALGAMATION

Takeover of business of two or more companies by a new company formed for the purpose,,