HOW TO - Forfeiture of shares and re issue journal entries

How to post journal entries for share forfeiture, and how to forfeit shares:

1. start by cancelling share capital of the forfeited shares
          do so by:
        Dr. share capital                                     xxx
        Cr. Share forfeiture account                   xxx

2. cancel share premium 
        Dr. share premium                                 xxx
        Cr. Share forfeiture account                   xxx

3. Write off the forfeited shares in arrear (they are no longer in arrear)
       Dr. share forfeiture account                   xxx
       Cr. call in arrear ac                                 xxx

during the date of re issuing the forfeited shares

4.  Reinstate share capital of the shares being reissued (at the par value)
       Dr. share reissue account                     xxx
       Cr. share capital                                    xxx

5. Cash being received paid at the (value of reissuing price)
      Dr. cash                                              xxx
      Cr. Share re issue                               xxx

6. Write off the reissued forfeited shares which are re issued (at reissuing price)
         Dr, share forfeited                           xxx
         Cr. share reissued                            xxx

7. Close the accounts
                      The balancing figure (gain) of the share reissue account is transferred to share premium account.

for illustration/worked example click here