Forfeiture and reissue of shares questions with solutions

New CBSE class 12 share capital problems every time, from issue in instalments to pro rata allotment, forfeiture and reissue. Type the journal entries and each one is checked.

Level

Set

How answers are marked
  • Pick the account for each line and type its amount under Dr or Cr. The lines of an entry can be in any order.
  • Amounts are whole rupees and must be exact. Commas, ₹ and Rs. are fine.
  • Each entry has as many lines as the answer. A capital reserve transfer that is nil stays empty.
  • Narrations are in the key but not marked.
  • When a question asks for the cash book, money refunded on applications goes in the cash book only, not in the journal. NCERT Illustration 18 shows it in both.

    Answers are saved on this device as you type.

    How the problems are made

    Each problem is an invented company issuing equity shares of ₹10, ₹20 or ₹100, at par or at a premium, with the entries NCERT uses in chapter 1 of Accountancy Part II. Share counts are picked so every amount comes out in whole rupees, and no call is more than a quarter of the face value. Shares are never issued at a discount, as the chapter says a company cannot ordinarily do that.

    Pro rata forfeiture, worked: set SHARE2

    Malwa Pharma allots 2 shares for every 3 applied for, at ₹2 on application. Harish was allotted 1,700 shares, so he applied for 2,550 and paid ₹5,100. He did not pay allotment, so the ₹1,700 premium on his shares is debited back and the whole ₹5,100 is forfeited. Shalini paid ₹9,800 on 1,400 shares, including ₹1,400 premium, so ₹8,400 is forfeited. When 1,800 shares are reissued at ₹9 (all of Shalini’s and 400 of Harish’s), ₹8,400 + ₹1,200 = ₹9,600 was forfeited on them, the discount is ₹1,800, and ₹7,800 goes to capital reserve. Open set SHARE2

    Questions

    How do you calculate the amount forfeited when shares were allotted pro rata?

    Count everything the shareholder paid, including the application money on all the shares applied for, then take out any premium the company received from them. The excess application money that was credited to allotment counts as paid, so it is forfeited too.

    When is Securities Premium Reserve debited on forfeiture?

    Only when the premium on the forfeited shares was not received, usually because the allotment money that included it was not paid. Premium already received stays in Securities Premium Reserve and is never part of the amount forfeited.

    How much goes to capital reserve when only some forfeited shares are reissued?

    Only the amount forfeited on the shares reissued, less the discount allowed on them. The forfeited amount on shares not yet reissued stays in the Share Forfeiture account until they are.

    What is the maximum discount on reissue of forfeited shares?

    The amount forfeited on those shares. If ₹6 was forfeited on a ₹10 share, it can be reissued as fully paid for as little as ₹4. At that price the discount uses up the whole forfeited amount, so nothing goes to capital reserve.

    Do I have to use a Calls in Arrears account?

    No. NCERT shows both ways. With the account, unpaid calls are debited to Calls in Arrears when the call money is received, and that account is credited on forfeiture. Without it, the unpaid call accounts are credited directly. Each question here says which one the company uses.

    Which share capital is debited when shares are forfeited before the final call?

    Only the amount called up so far. If ₹7 of a ₹10 share has been called when the shares are forfeited, Share Capital is debited with ₹7 a share. When the shares are reissued as fully paid, Share Capital is credited with the full ₹10.

    How is the share forfeiture account shown in the balance sheet?

    Its balance is added to subscribed capital in the share capital note, as forfeited shares, until those shares are reissued. Calls in arrears are deducted in the same note, and capital reserve goes under reserves and surplus.

    Sources, checked October 28, 2026: NCERT Accountancy Part II, class 12, chapter 1, Accounting for Share Capital (PDF, reprint 2026-27); chapter 3, Financial Statements of a Company (PDF), the share capital note.