the call was to be made immediately for acquiring cash. 11.5 Questions and interpretive responses specific to ESOPs. The authorized capital of the company permitted the issue of additional shares. Forfeiture and Reissue of Shares - Learn Accounting: Notes, Procedures Securities premium reserve balance is allowed to be utilized. When the par value is changed to reflect the stock split, no entry is required; however, the number of outstanding shares should be increased to reflect the split. Companies often establish two separate "capital in excess of par value" accountsone for common . If the company credits Securities Premium Account only when the premium has been received, then the question of debiting Securities Premium Account on forfeiture will not arise. Stock dividends almost always create fractional shares. Companies issue shares to raise money and expand business operations. Here, we were not given the relevant details on the balance in additional paid-in capital, and, as a result, retained earnings were debited. In the case of stock dividends declared by closely held reporting entities. Assuming that the scheme is fully approved by all parties interested and by the court, draft necessary Journal Entries and Balance Sheet of the Company after the scheme has been carried into effect. FG Corp has 1 million common shares outstanding. The journal entries are: Illustration 1: Show the necessary accounts in all the methods. Cash A/c Dr. (Being the receipt of cash of `50 each for 8964 being the call made as per Boards resolution dated..). Equity Share Capital (`4) A/c Dr. (Being consolidation of 25,000 10% equity shares of `4 each into, To Equity Share Capital (New `10) each (See note), By 10% Cumulative Preference Share Capital (`10) A/c, To Freehold Property 1,30,000, Less : Debenture holders 84000, 8,000 10% Cumulative Preference Shares of `10 each, 10,500 Equity Shares of `10 each (of the above 10,500 equity shares, 500 equity shares were issued for consideration other than cash), Trade Payables 11,000, Creditors for Expenses 30,000, Leasehold Property 1,00,000, Scheme dated. Taxation and Cost of Scheme are to be ignored. Internal Reconstruction Recognisation with in the entity. You will have to determine the number of shares you want to buy back in order to figure the total you will be paying out in cash in exchange for the shares. All moneys were duly received except the money on call on 100 shares which were forfeited after the requisite notices had been served. If shares on which securities premium had not been received till forfeiture are reissued, Securities Premium Account will be credited with the amount of securities premium in respect of reissued shares and the amount to be debited to Forfeited Shares Account will be calculated after taking this credit into consideration. Terms of Service 7.
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