Forfeiture of shares

Accounting for forfeiture of
shares
Harshit Garg
Assistant Professor
IBM (UG)
BCCC0012: Company Accounts and
Practices
1

Forfeiture of Shares:
Forfeiture of shares means the cancellation of allotment
to defaulting shareholders (who has fail to pay one or
more instalment ) and to treat the amount already
received on such shares as forfeited.
• Their share will be forfeit, which means that the
shareholder’s share will be cancelled.
• All the entries associated with the forfeited stocks,
apart from those associated with premium, already
mentioned in the accounting records must have
conversed.
• The share capital account is debited with the amount
called-up.
Practices
2

Journal entry for forfeiture of shares
issued at Par
Date Particular Amount
(Dr.)
Credit
(Cr.)
Share Capital A/c (Called up amount) Dr XYZ
To Share Forfeiture A/c (Paid-up amount) Cr XYZ
To Share Allotment A/c Cr XYZ
To Share Calls A/c (individually) Cr XYZ
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Forfeiture of Shares issued at
Premium
• This situation has two possibilities
1. Securities Premium amount has been
received
2. Securities Premium amount has not been
received
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4

1. Securities Premium amount has
been received
Date Particular Amount(Dr.) Credit
(Cr.)
Share Capital A/c Dr. XYZ
To Share Allotment A/c Cr. XYZ
To Share Forfeited A/c Cr. XYZ
To First Calls A/c Cr. XYZ
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2. Securities Premium amount has not
been received
Date Particular Amount (Dr.) Credit (Cr.)
Share Capital A/c Dr. XYZ
Security Premium A/c Dr. XYZ
To Share Allotment A/c Cr. XYZ
To Share Forfeitured A/c Cr. XYZ
To First Call A/c Cr. XYZ
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Reissue of Forfeited Shares
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Question
• X, a shareholder, holding 100 shares of Rs 10
each has paid application money of Rs 2 per
share and allotment money of Rs 3 per share,
but has failed to pay the first call of Rs 2 per
share and second call of Rs 3 per share. His
shares were forfeited.
• Make the journal entry to record the
forfeiture of shares.
Practices
8

Journal entries
Share capital A/c Dr 1000
( 100 shares X 10 Each)
To Share Forfeited A/c 500
( 100 share X 2+3)
To Share I st call 200
( 100 share X 2)
To share 2 nd & final call 300
( 100 shares X 3)
( Being 100 shares of Ram @ Rs. 10 forfeited)
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Practice Question
Mohan , a shareholder, holding 500 shares of Rs
10 each has paid application money of Rs 3 per
share and allotment money of Rs 3 per share,
but has failed to pay the first call of Rs 2 per
share and second call of Rs 2 per share. His
• Make the journal entry to record the
forfeiture of shares.
Practices
10

Question
Alpha Ltd. issued 10000 shares of Rs 100 each
payable as: Rs 25 on application. Rs 25 on allotment
Rs 20 on First call and Rs 30 on second and final call.
9000 shares were applied for and allotted. All the
payments were received with the exception of
allotment money, first call and second and final call
money on 300 shares allotted to Ganesh. The Board
of Directors decided to forfeit these shares. Make
journal entry to record transaction relating to
forfeiture of shares
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Ans
( 300 shares X 100 Each)
( 300 share X 25)
To share allotment A/c 7500
(300 shares X 25)
To Share First call A/c 6000
( 300 share X 20)
To share Second and & final call A/c 9000
( 300 shares X 30)
( Being 300 shares of Ganesh @ Rs. 100 forfeited)
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Practice Question
Karma Ltd. issued 17800 shares of Rs 10 each
payable as: Rs 2 on application. Rs 4 on allotment
Rs 2 on First call and Rs 3 on second and final call.
17000 shares were applied for and allotted. All the
payments were received with the exception of
allotment money, first call and second and final call
money on 1520 shares allotted to Ganesh. The
Board of Directors decided to forfeit these shares.
Make journal entry to record transaction relating to
forfeiture of shares
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Question
• ABC Software Ltd. issued Rs 500000 capital divided into
equity shares of Rs 10 each. The shares were issued at
a premium of Rs 4 per share and were payable as : Rs 3
per share on application, Rs 7 (including premium) per
share on allotment and the balance on call. All the
shares applied for and were duly allotted. All the
money was duly received except on 500 shares on
which the call money was not received. Company
decided to forfeit these shares.
• Make journal entry to record the forfeiture of 500
shares.
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14

Journal entries
(500X 10)
(500 X 6)
To Share First & final call A/c 2000
(500 X 4)
( Being 500 shares @ Rs. 10 are
forfeited)
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Practice Question
• Infinix Ltd. issued Rs 600000 capital divided into equity
shares of Rs 10 each. The shares were issued at a
premium of Rs 5 per share and were payable as : Rs 4
per share on application, Rs 9(including premium) per
share on allotment and the balance on call. All the
shares applied for and were duly allotted. All the
money was duly received except on 800 shares on
which the call money was not received. Company
decided to forfeit these shares.
• Make journal entry to record the forfeiture of 800
shares.
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• 11. Naman Ltd issued 20,000 shares of ₹ 100
each, payable ₹ 25 on application, ₹ 30 on
allotment, ₹ 25 on first call and the balance on
final call. All money duly received except
Anubha, who holding 200 shares did not pay
allotment and calls money and Kumkum, who
holding 100 shares did not pay both the calls.
The directors forfeited shares of Anubha and
Kumkum.
• Give journal entries.
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JOURNAL ENTRIES in the books of naman Ltd
Bank A/c (20000 X 25) Dr 500000
To Share Application A/c 500000
Share Application A/c 500000
To share capital 500000
Share Allotment (20000x30) 600000
To Share Capital 600000
Bank A/c (600000-200x30) 594000
To share allotment 594000
Share 1 call A/c (20000 X 25) 500000
TO Share capital 500000
Bank A/c (500000-(200+100 x25)) 492500
To share 1 call 492500
Share 2 ND Final call A/c (20000 X20) 400000
Bank a/c Dr(400000-300x20) 394000
to share 2nd & final call 394000
Share Capital A/c Dr 30000
(300 x 100)
To share allotment (200 x30) 6000
To share 1 st call (300x25) 7500
To share 2nd call (300x20) 6000
To share forfeiture 10500
(200 x25)+(100x25+30)
( being shares of kumkum and abha are forfeited)
OR
Share Capital A/c (200 X100) 20000
To share forfeited A/c (200X25) 5000
TO Share allotment (200x30) 6000
To share 1 call (200*25) 5000
To share 2 nd final call (200x20) 4000
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Problem 2: Forfeited Partial Called Up
Capital
X Ltd forfeited 200 equity shares of Rs. 10 each,
Rs. 8 called-up for non-payment of first call
money @ Rs. 2 each. Applications money @ Rs.
2 per share and Allotment money @ Rs. 4 per
share have already been received by company.
Give Journal entries for the forfeiture.
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Question
The L & T Company Ltd. offered to public for subscription of 50,000
shares of Rs. 20 each at a premium of Rs. 5 per share. The amount was
payable as under:
On application Rs. 5 per share
On allotment Rs. 12 per share (Including premium of Rs 5 per share)
On first call Rs. 4 per share
On Second and Final call Rs. 4 per share
Applications were received for all the shares. Allotment was made to
all the applicants in full.
Mr .A failed to pay allotment and call money on 200 shares held by
him.
Mr.B was allotted 300 shares. He did not pay the call money. Their
Make necessary journal entry for the forfeiture only.
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Share capital A/c (200 x 20) Dr 4000
Security Premium A/c (200X5) Dr 1000
(200*5)
To share allotment A/c 2400
(200 X 12(7+5)
(200*4)
(200 X 4)
(Forfeiture of 200 shares due to non payment of
allotment and call money)
(300 X 20)
(300 X 5+7)
(300 X 4)
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Practice Question
Shivam Ltd. offered to public for subscription of 1,00,000 shares of Rs.
10 each at a premium of Rs. 2 per share. The amount was payable as
under:
On application Rs. 2 per share
On allotment Rs. 5 per share (Including premium of Rs 2 per share)
On first call Rs. 2 per share
On Second and Final call Rs. 3 per share
Applications were received for all the shares. Allotment was made to
all the applicants in full. Rohan failed to pay allotment and call money
on 50 shares held by him. Sohan was allotted 85 share, He did not pay
the call money. Their shares were forfeited.
Make necessary journal entry for the forfeiture only.
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Question
• Jai Company Ltd. forfeited 200 shares of Rs 10
each, Paid up on which Rs. 7 have been
received and final call of Rs. 3 per share
remains unpaid. These shares were later on
reissued for Rs. 8 per share fully paid up.
• Make journal entry for recording the
forfeiture and reissue of shares.
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Share capital A/c (200X10) Dr 2000
To Share Forfeited A/c (200 X 7) 1400
To share final call A/c(200 X3) 600
(Forfeiture of 200 shares due to non
payment of call money)
Bank A/c (200 X8) Dr 1600
Share forfited A/c (200 x 2) Dr 400
To Share Capital (200X 10) 2000
( Reissue of forfited Shares )
Share forfeited A/c (1400-400) Dr 1000
To Capital Reserve A/c 1000
( Being share forfiture Amount transferred
to capital reserve A/c BCCC0012: Company Accounts and
Practices
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Practice Question
Mohan Ltd. forfeited 750 shares of Rs 10 each,
fully called up on which Rs. 6 have been
received and final call of Rs. 4 per share remains
unpaid. These shares were later on reissued for
Rs. 7 per share fully paid up.
• Make journal entry for recording the
forfeiture and reissue of shares.
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Journal entry in the books of Mohan ltd
Share Capital A/c (750x10) 7500
To Share forfeited A/c (750x6) 4500
To Share 2 nd & Final call a/c (750x4) 3000
( being om 750 shares@10 are called but shares
are forfeited due to non payment of call money)
Bank A/c (750x7 ) Dr 5250
Share Forfeied A/c (750x3) Dr. 2250
To share Capital (750x10) 7500
(being reissue of forfeited shares)
Share forfeited a/ dr (4500-2250) 2250
to capital reserve 2250
( being amount of share forfeited into capital reserve)BCCC0012: Company Accounts and
Practices
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Question
.Record the journal entries for forfeiture and
re-issue of shares in the following cases
(i) X Ltd forfeited 20 shares of Rs 10 each,Rs 7
called up on which the shareholder had paid
application and allotment money of Rs 5 per
share. Out of these, 15 shares were re-issued to
Naresh as Rs 7 per share paid up for Rs 8 per
share.
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Journal entries in the books of X ltd.
Share Capital A/c(20x7) Dr 140
To share forfeited a/c 100
To Share Call a/c 40
( Being 20 Shares Forfeited)
Bank A/c (15x8) Dr 120
To security premium (15x1) 15
( Being forfeited shares are reissued)
Share forfeited A/c Dr 75
To Capital Reserve 75
(15/20x100)
( Being share forfeited account transferred to capital reserve ac)
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Amount to be transferred into Capital Reserve
Share Forfeited amount for forfeited shares(100x15/20) 75
Less- Amount utilised for re-issue 0
Amount transfferd for capital reserve 75
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Practice Question
Pass the journal entries for forfeiture and re-
issue of shares in the following cases
(i) Tata Ltd forfeited 100 shares of Rs 10 each,Rs
8 called up on which the shareholder had paid
application Rs 3 and allotment of Rs 2 per
share. Out of these, 60 shares were re-issued to
Naresh as Rs 9 per share paid up for Rs 8 per
share.
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Journal entries in the books of TATA ltd.
Share Capital A/c(100X8) Dr 800
To share forfeited a/c (100X5) 500
To Share Call a/c (100X3) 300
Bank A/c (60X9) Dr 540
To share Capital (60X8) 480
To security premium (60X1) 60
(500/100X60)
( Being share forfeited account transferred to capital reserve
ac) BCCC0012: Company Accounts and
Practices
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Share Forfeited amount for forfeited
shares(500/100x60) 300
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Issue and Redeemed at premium
• Y Ltd forfeited 90 shares of Rs 10 each, Rs 8
called up issued at a premium of Rs 2 per
share to ’R’ for non-payment of allotment
money of Rs 5 per share (including premium).
Out of these, 80 shares were re-issued to
Sanjay as Rs 8 called up for Rs 10 per share.
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Journal entries in the books of Y ltd.
Share Capital A/c(90X8) Dr 720
Security Premium (90x2) 180
To share forfeited a/c (90x5) 450
To Share Allotment a/c (90x5) 450
Bank A/c (80X10) Dr 800
To share Capital (80X8) 640
(450/90x80)
BCCC0012: Company Accounts and Practices 35

Share Forfeited amount for forfeited
shares(450/90x80) 400
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Practice Question
Ramson Ltd forfeited 200 shares of Rs 100 each,
Rs 100 called up issued at a premium of Rs 25
per share to ’Bablu’ for non-payment of
allotment money of Rs 50 per share (including
premium),First and final call Rs.35. Out of
these, 120 shares were re-issued to Sanjay for
premium as Rs 100 face value for Rs 120 per
share.
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Journal entries in the books of Ramson ltd.
Share Capital A/c(200x100) Dr 20000
Security Premium (200x25) 5000
To share forfeited a/c (200x40) 8000
To Share Allotment a/c (200x50) 10000
To Share First & Final call (200 x35) 7000
Bank A/c (120*120) Dr 14400
(8000/200*120)
Share Forfeited amount for forfeited shares(8000/200x120) 4800
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Question
• 43.A Ltd was registered with an authorised capital of
Rs 10,00,000 divided into equity shares of Rs 10 each.
The company invited applications for the issue of
50,000 shares. Applications for 48,000 shares were
received. All calls were made and were duly received
except the final call of Rs 2 per share on 1,000 shares.
All these shares were forfeited and later on re-issued
at Rs 9,000 as fully paid.
(i)Show how ‘share capital’ will appear in the balance
sheet of A Ltd. as per Schedule VI, Part I of the
Companies Act, 1956. (Compartment 2014)
(ii)Also prepare ‘notes to accounts’ for the sam
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A Ltd
Balance Sheet
(as at ………)
PARTICULAR Note no Amount
Equity & Liablities
A. Shareholder fund
a1.Share Capital 480000
a2. Reserve & Surplus 7000
Assets
A. Current assets
a.1 -Cash & Cash Equil. 487000
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Notes to account
W.N-1 Share Capital
Authorised Share Capital 1000000
(100000 shares @ Rs. 10 )
Issued Share Capital 500000
(50000 shares @ Rs. 10 each)
Subscribed Share Capital 480000
(48000 share @ Rs. 10 each)
Called up and Paid up share capital 480000
(48000 share @ Rs. 10 each)
Reserve and Surplus
Capital Reserve
Amount received on forfeited shares
Less - utilised in reissue (1000x1)
Transferred to security premium
Cash & Cash equilvalent 487000BCCC0012: Company Accounts and
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• 44.Record the journal entries for forfeiture and re-
issue in the following cases
(i)X Ltd forfeited 200 shares of Rs 100 each, Rs 70
called up, on which the shareholders had paid
application and allotment money of Rs 50 per share.
Out of these, 150 shares were re-issued to Naresh as
Rs 70 paid-up for Rs 80 per share.
(ii)Y Ltd forfeited 180 shares of Rs 10 each, Rs 8 called-
up, issued at a premium of Rs 2 per
share to R for non-payment of allotment money of Rs
5 per share (including premium). Out of these, 160
shares were re-issued to Sanjay as Rs 8 called up for
110 per share fully paid-up.(All India 2013)
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44

Give journal entries to record the following
transactions of forfeiture and re-issue of shares
and open share forfeiture account in the books of
the respective companies.L Ltd forfeited 470
equity shares of Rs 10 each issued at premium of
Rs 5 per share for non-payment of allotment
money Rs 8 per share (including share premium Rs
5 per share) and the first and final call of Rs 5 per
share. Out of these, 60 equity shares were
subsequently re-issued @ Rs 14 per shares.
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46

• What amount of profit on reissue will be transferred to Capital
Reserve under the following situations?
• Z Ltd. forfeited 800 equity shares of Rs. 10 each issued at a discount
of 10% for the non-payment of first and final call of Rs. 3 per share.
The forfeited shares were reissued at Rs. 12 per share as fully paid-
up.
• 3,000 shares of Rs. 10 each of Rakesh was forfeited by crediting Rs
5,000 to Forfeited Shares Account. Out of these, 1,800 shares were
reissued to Mohan for Rs. 9 per share fully paid-up.
• Z Ltd. forfeited 20 shares of Rs 100 each 60 called-up issued at par
to Shiv on which he paid Rs. 20 per share. Out of these, 15 shares
were reissued to Rajesh as Rs. 60 paid-up for Rs. 45 per share.
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47

Questions
• India infrastructure Ltd. has issued its shares of Rs. 20
each .
• Mahima holding 100 shares did not pay final call of Rs
5 per share. Her shares were forfeited. Later on the
company reissued 100 shares of these forfeited shares
at
• (I) Rs. 15 per share
• (II) Rs. 20 per share, and
• (III) Rs. 25 per share
• Make journal entries for the forfeiture and reissue of
the shares in the books of company.
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Journal entries in the books of India Infras. Ltd.
Share Capital A/c (100 x20) Dr. 2000
To Share Forfeiture (100x15) 1500
To Share Final calls (100x5) 500
( being 100 shares @ Rs.20 of Mahima is forfeited due to
non payment of final call)
CASE -1
Bank A/c (100 X 15) Dr 1500
Share forfeiture A/c (100 X 5) Dr. 500
( being reissue of forfieted shares )
Share forfeiture A/c (1500-500) Dr 1000
To capital reserve 1000
( being surplus of share fofeiture A/c transferred
into capital reserve A/c)
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CASE -2
Bank A/c (100 X 20) Dr 2000
Share forfeiture A/c Dr 2000
( being surplus of share fofeiture A/c transferred into
capital reserve A/c)
CASE -3
Bank A/c (100 X 25) Dr 2500
To Seurity premium 500
Share forfeiture A/c Dr 1500
( being surplus of share fofeiture A/c transferred into
capital reserve A/c)
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Practice Question
• Aryabharat Ltd. has issued its shares of Rs. 100 each .
Shubham holding 250 shares did not pay final call of Rs
40 per share. Her shares were forfeited. Later on the
company reissued 250 shares of these forfeited shares at
• (I) Rs. 40 per share
• (II) Rs. 80 per share, and
• (III) Rs. 120 per share
• Make journal entries for the forfeiture and reissue of
the shares in the books of company.
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Question
A Company issued for public subscription 40,000 equity shares of Rs. 10 each
at a premium of Rs. 2 per share payable as under:
• On application Rs. 2 per share
• On Allotment Rs. 5 per share (including premium)
• On first call Rs. 2 per share
• On final call Rs. 3 per share
• Applications were received for 70,000 Shares. Allotment was made pro-
rata to the applicants for 50,000 shares, the remaining applications being
refused. Money overpaid on applications was applied towards sum due on
allotment. A, to whom, 1,500 shares were allotted, failed to pay the
allotment and call money. B, to whom 2,000 shares were allotted, failed to
pay the two calls. The shares of A and B were subsequently forfeited after
the second call was made. 3,000 of the forfeited shares were reissued @
Rs. 8 per share fully paid. The reissued shares included all of A’s shares.
• Pass journal entries in the books of the company to record the above
transactions.
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Working Notes :
• 40,000 shares were issued to applicants for 50,000 shares
• Ratio of allotment is 4:5
• A was allotted 1,500 shares so he applied for =1500×5/4 = 1875
shares
• A paid on application 1875 × 2 = 3,750
• A was allotted 1,500 shares and was to pay on application = 3,000
• Surplus transferred to Share Allotment = 750
• Total Amount due on allotment = 40,000 × 5 = 2,00,000
Less: Surplus adjusted from Share Application = 20,000
= Balance amount due = 1,80,000
Less: Arrears from A (Due Rs. 7,500 Less: Surplus Application amount
Rs 750) = 6,750
= Amount received on allotment = 1,73,250
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• Amount due on share First Call = 40,000 × 2 = 80,000
Less: Arrears from A & B [(1,500+2,000) × 2] = 7,000
= Hence amount received = 73,000
• Amount due on Second and Final Call = 40,000 × 3 =
1,20,000
Less: Arrears from A & B [(1,500+2,000) × 3] = 10,500
= Amount Received = 1,09,50
• Amount Forfeited A & B = 13,750
From A = 3,750
From B (2,000×5 = 10,000
• Amount forfeited on 3,000 shares = [From A Rs. 3,750And
From B (10,000 ÷ 2,000) × 1,500] = 3,750+ 7,500= 11,250
Less: Discount allowed on re-issue = 6,000
= Balance transferred to Capital Reserve = 5,250
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Bank A/c Dr (70000x2) 140000
To Share Application 140000
Share Application A/c Dr 140000
To share capital (40000x2) 80000
To Bank (20000 x2) 40000
To share Allotment (10000x2) 20000
Share Alloment A/c (40000x5) 200000
To share Capital (40000 X 3) 120000
To Security Premium (40000x2) 80000
Bank A/c (200000-20000-6750) 173250
To Share Allotment 173250
Share 1 call A/c Dr (40000x2) 80000
To share Capital 80000
Bank A/c(80000-3500x2) Dr 73000
To Share 1 call 73000
Share 2 call a/c (40000x3) Dr 120000
Bank a/c (120000-3500x3) 109500
To share 2 nd & Final call 109500
Share Capital A/c (1500+2000)x10) 35000
Security premium a/c (1500x2) 3000
To share forfeited 13750
(1875x2+2000x5)
To share allotment 6750
To Share 1 call (1500+2000x2) 7000
To share 2 nd final call (3500 x3) 10500
( being shares of a and B are forfeited)
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12. Kishna Ltd issued 15,000 shares of ₹ 100 each at a
premium of ₹ 10 per share, payable as follows:
On application- ₹ 30
On allotment -₹ 50 (including premium)
On first and final call - ₹ 30
All the shares subscribed and the company received all
the money due, With the exception of the allotment and
call money on 150 shares. These shares were forfeited
and reissued to Neha as fully paid share of ₹ 12 each.
Give journal entries in the books of the company.
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Bank A/c Dr. 4,50,00
0
To Share
Applicat
ion A/c
4,50,00
0
(Share Application money
received for 15,000 shares @
₹ 30 per share)
Share Application
A/c
Dr. 4,50,00
0
To Share
Capital
A/c
4,50,00
0
(Share Application money of
15,000 shares transferred to
ShareCapital Account)
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•
Share Allotment A/c
• Dr.
• 7,50,000
• To Share Capital A/c
• 6,00,000
• To Securities Premium A/c
• 1,50,000
• (Share Allotment money on 15,000 shares @ ₹ 50 per shareincluding ₹ 10 securities premium due)
• Bank A/c
• Dr.
• 7,42,500
• To Share Allotment A/c
• 7,42,500
• (Share Allotment received on 14,850 shares and 150 sharesfailed to pay the money due)
• Share First and Final Call A/c
• Dr.
• 4,50,000
• To Share Capital A/c
• 4,50,000
• (Share First and Final Call for 15,000shares @ ₹ 30 per share due)
• Bank A/c
• Dr.
• 4,45,500
• To Share First and Final Call A/c
• 4,45,500
• (Share First and Final Call received for 14,850 shares @ ₹ 30 per share and 150 shares failed to pay amount due)
• Share Capital A/c (150×100)
• Dr.
• 15,000
• Share Premium A/c (150×10)
• Dr.
• 1,500
• To Share Allotment A/c (150×50)
• 7,500
• To Share First and Final Call A/c (150×30)
• 4,500
• To Share Forfeiture A/c (150×30)
• 4,500
• (150 shares forfeited for non-payment of Share Allotment and ShareFirst and Final Call )
• Bank A/c
• Dr.
• 18,000
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• 1. Share allotment Account is
• a) Personal
• b) Real
• c) Nominal
• d) Real and nominal
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• 2. The allotment of shares in case of
oversubscription is called….
• A. Pro‐rata allotment
• B. Private Placement
• C. Offer for sale
• D. None of these
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3. Call-in-arrear is shown
• a) Under the head current liabilities
• b) By deducting from the called up capital
• c) Under the head current assets
• d) deducting from paid up capital
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4. Security premium account can be utilized for
………….
• A. Issuing fully paid bonus shares
• B. Write off preliminary expenses
• C. Write off underwriting commission
• D. All of these
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5. Dividend is usually paid on
• a) Called-up-capital
• b) Nominal capital
• c) Paid-up-capital
• d) Uncalled capital
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6.Authorized capital is called as…………
• A. Reserve capital
• B. Nominal Capital
• C. Capital Reserve
• D. Subscribed capital
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7. A Company issued 50,000 shares of ₹20 each
at 5% premium. ₹10 were payable on
application and balance on allotment. What will
be the allotment amount?
(A) ₹5,00,000
(B) ₹4,75,000
(C) ₹5,50,000
(D) ₹5,25,000
Practices
65

• 63. Following amounts were payable on issue of
shares by a Company : ₹3 on application, ₹3 on
allotment. ₹2 on lirst call and ₹2 on final call. X
holding 500 shares paid only application and
allotment money whereas Y holding 400 shares
did not pay final call. Amount of calls in arrear
will be :
(A) ₹3,800
(B) ₹2,800
(C) ₹1,800
(D) ₹6,200
Practices
66

• 64. The subscribed capital of a company is
?80,00,000 and the nominal value of the share is
? 100 each. There were no calls in arrear till the
final call was made. The final call made was paid
on,77,500 shares only. The balance in the calls in
arrear amounted to ?62,500. Calculate the final
call on share.
(A) ₹7
(B) ₹20
(C) ₹22
(D) ₹25
Practices
67

• 65. A shareholder holding 600 shares paid the
amount of call @ ₹5 per share on 1st
November 2018 whereas the call was due on
1st March 2019. Interest on calls in advance as
per Table F will be :
(A) ₹45
(B) ₹60
(C) ₹50
(D) ₹120
Practices
68

• 69. A Company invited applications for 1,00,000
shares and it received applications for 1,50,000
shares. Applications for 30,000 shares were
rejected and the remaining were allotted shares
on prorata basis. How many shares an applicant
for 3,000 shares will be allotted :
(A) 2,500 Shares
(B) 3,600 Shares
(C) 4,500 Shares
(D) 2,000 Shares
Practices
69

• 70. E Ltd. had allotted 10,000 shares to the
applicants of 14,000 shares on pro-rata basis. The
amount payable on application was ₹2. F applied
for 420 shares. The number of shares allotted and
the amount carried forward for adjustment
against allotment money due from F will be : (C.F.
Foundation, June 2013)
(A) 60 shares; ₹120
(B) 340 shares; ₹160
(C) 320 shares, ₹200
(D) 300 shares; ₹240
Practices
70

• 71. If applicants for 80,000 shares were
allotted 60,000 shares on prorata basis, the
shareholder who was allotted 1,200 shares
must have applied for :
(A) 900 Shares
(B) 3,600 Shares
(C) 1,600 Shares
(D) 4,800 Shares
Practices
71

• 72. A Company offered 50,000 shares of ?10 each at
par payable as to ?3 on applications, ?5 on allotment
and the balance on final call. Applications were
received for 60,000 shares and the allotment was
made pro-rata. The excess application money was to be
adjusted on allotment and call. How much amount will
be transferred from Share Application A/c to Share
Allotment A/c?
(A) ₹1,80,000
(B) ₹30,000
(C) ₹1,50,000
(D) ₹50,000
Practices
72

• 73. A company issued 4,000 equity shares of ₹10 each at
par payable as under : On application ₹3; on allotment ₹2;
on first call ₹4 and on final call ₹1 per share.
Applications were received for 13,000 shares. Applications
for 3,000 shares were rejected and pro-rata allotment was
made to the applicants for 10,000 shares. How much
amount will be received in cash on first call? Excess
application money is adjusted towards amount due on
allotment and calls.
(A) ₹6,000
(B) Nil
(C) ₹16,000
(D) ₹10,000
Practices
73

• 74. A company issued 4,000 equity shares of ₹10
each at par payable as under : On application ₹3;
on allotment ₹2; on first call ₹4 and on final call
?1 per share.
Applications were received for 10,000 shares.
Allotment was made pro-rata. How much amount
will be received in cash on allotment?
(A) ₹8,000
(B) ₹12,000
(C) Nil
(D) None
Practices
74

• 75. A company issued 5.000 equity shares of
₹100 each at par payable as to :
₹40 on application; ?50 on allotment and ₹10 on
call.
Applications were received for 8,000 shares.
Allotment was made on pro-rata. How much
amount will be received in cash on allotment?
(A) ₹2,50,000
(B) ₹1,20,000
(C) ₹1,30,000
(D) ₹50,000
Practices
75

• 77. A Company purchased a Building for
₹12,00,000 out of which ₹2,00,000 were paid
in cash. Balance amount was paid by issue of
equity shares of ₹10 each at 25% premium.
How many shares will be issued by the
Company :
(A) 1,00,000 Shares
(B) 80,000 Shares
(C) 1,20,000 Shares
(D) 96,000 Shares
Practices
76

• 78. If shares of ₹4,00,000 are issued for
purchase of assets of ₹5,00,000, ₹1,00,000
will be treated as ……………………. :
(A) Discount
(B) Premium
(C) Profit
(D) Loss
Practices
77

MCQ on Forfeiture
• 81. Forfeiture of shares results in the
reduction of:
(A) Subscribed Capital
(B) Authorised Capital
(C) Reserve Capital
(D) Fixed Assets
Practices
78

• 82. Which one of the following items is not a
part of subscribed capital?
(A) Equity Shares
(B) Preference Shares
(C) Forfeited Shares
(D) Bonus Shares
Practices
79

• 83. At the time of forfeiture of shares the
share capital account is debited with
(A) Face value
(B) Called up value
(C) Paid up value
(D) Issued value
Practices
80

• 84. Voluntary return of shares for cancellation
by the shareholders is called
(A) Cancellation of shares
(B) Forfeiture
(C) Surrender of shares
(D) None of these
Practices
81

• 85. If the Premium on the forfeited shares has
already been received, then Securities
Premium A/c should be :
(A) Credited
(B) Debited
(C) No treatment
(D) None of these
Practices
82

• 86. Balance of share forfeiture account is
shown in the balance sheet under the head
……………
(A) Share Capital Account
(B) Reserve and Surplus
(C) Current Liabilities and Provisions
(D) Unsecured Loans
Practices
83

• 87. On an equity share of ₹10 the company
has called up ₹8 but ₹6 have been received by
the company is forfeited, the capital account
should be debited by:
(A) ₹10
(B) ₹8
(C) ₹6
(D) ₹2
Practices
84

• 88. If a share of ₹10 issued at a premium of ₹3
on which the full amount has been called and
₹8 (including premium) paid is forfeited the
capital account should be debited with:
(A) ₹5
(B) ₹8
(C) ₹10
(D) ₹13
Practices
85

• 89. If a share of ₹10 issued at a premium of n
on which ₹9 (including premium) have been
called and ₹7 including premium is paid is
forfeited, the capital account should be
debited by :
(A) ₹10
(B) ₹7
(C) ₹8
(D) ₹9
Practices
86

• 90. 600 shares of ₹10 each were forfeited for
non-payment of ₹2 per share on first call and
₹5 per share on final call. Share Forfeiture
Account will be credited with:
(A) ₹1,200
(B) ₹1,800
(C) ₹3,000
(D) ₹4,200
Practices
87

• 91. 800 shares of ₹10 each issued at 20%
premium were forfeited for non-payment of
allotment money of ₹5 (including premium)
and first & final of 3 per share. Share
Forfeiture Account will be credited with :
(A) ₹1,600
(B) ₹2,400
(C) ₹3,200
(D) ₹4,800
Practices
88

• 92. 800 shares of ₹10 each issued at 30%
premium (to be paid on allotment) were
forfeited for non-payment of ₹2 per share on
first call and 2 per share on final call. Share
Forfeiture Account will be credited with :
(A) ₹2,400
(B) ₹4,800
(C) ₹3,200
(D) ₹7,200
Practices
89

• 93. A Company forfeited 300 shares of ₹10
each, ₹8 per share called up, on which A had
paid application and allotment money of ₹6
per share. Share Forfeiture Account will be
credited with :
(A) ₹600
(B) ₹1,800
(C) ₹1,200
(D) ₹2,400
Practices
90

• 94. On 300 equity shares of ₹10 the company
has called up ₹8 but ₹6 have been received by
the company are forfeited, the forfeiture
account should be credited by :
(A) ₹2,400
(B) ₹1,200
(C) ₹1,800
(D) ₹600
Practices
91

b
• 95. If 400 shares of ₹10 issued at a premium
of ₹3 on which the full amount has been
called and ₹8 (including premium) have been
received are forfeited, the forfeiture account
should be credited with :
(A) ₹3,200
(B) ₹2,000
(C) ₹1,200
(D) ₹2,800
Practices
92

• 96. If 500 shares of ₹10 issued at a premium
of ₹1 on which ₹9 (including premium) have
been called and ₹7 including premium have
been paid are forfeited, the forfeiture account
should be credited by :
(A) ₹3,000
(B) ₹3,500
(C) ₹4,000
(D) ₹4,500
Practices
93

• 97. A Company forfeited the following shares :
200 shares of ₹10 each; called up ₹9 per
share, paid-up ₹7 per share. Journal Entry for
forfeiture will be) :
Practices
94

• 98. X Ltd. forfeited 500 shares of ₹10 each, ₹7 called
up, issued at a premium of ₹2 per share to be paid at
the time of allotment for non-payment of first call of
X2 per share. Entry on forfeiture will be :
Practices
95

• 99. The amount of discount on reissue of
forfeited shares cannot exceed : (CPTDec.,
2012)
(A) 5% of the face value
(B) 10% of the face value
(C) The amount received on forfeited shares
(D) The amount not received on forfeited
shares
Practices
96

• 100. Discount allowed on re-issue of forfeited
shares is debited to :
(A) Share Capital A/c
(B) Share forfeiture A/c
(C) Statement of Profit & Loss
(D) General Reserve A/c
Practices
97

• 101. The balance of the forfeited shares
account after re-issue of forfeited shares is
transferred to :
(A) Statement of Profit & Loss
(B) Share Capital A/c
(C) Capital Reserve A/c
(D) General Reserve A/c
Practices
98

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