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A company forfeite… (Class 12 Accountancy SQP 2024-25, Q19b)

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AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 3 marks · Short answer

CBSE Class 12 Accountancy sample paper 2024-25: question 19(b)

From the official CBSE sample question paper for 2024-25, section A, question 19(b), for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q19(b) · 3 marks · Short answerAccounting for Share Capital

A company forfeited 8,000 shares of ₹ 10 each on which ₹ 8 were called (including ₹ 1 premium) and ₹ 6 was paid (including ₹ 1 premium). Out of these 5,000 shares were re-issued at maximum possible discount. Pass necessary journal entries.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

Open one hint at a time and try again before the next.

Hint 1

Separate the premium from the capital in both the called and paid amounts.

Hint 2

The most discount allowed is the amount forfeited per share.

Hint 3

When the full forfeited amount is used as discount, nothing goes to capital reserve.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Called ₹ 8 includes ₹ 1 premium, so ₹ 7 of capital is called; paid ₹ 6 includes ₹ 1 premium, so ₹ 5 of capital is received. Premium has been received, so it is not touched.

    ParticularsDr. (₹)Cr. (₹)
    Share Capital A/c Dr.56,000
    To Share Forfeited A/c40,000
    To Calls in Arrears A/c16,000
    (Being 8,000 shares forfeited)
    1½ marks

  2. Maximum discount on reissue = ₹ 5 per share (the forfeited amount). The 5,000 shares are reissued as ₹ 7 paid up for ₹ 2 each.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.10,000
    Share Forfeited A/c Dr.25,000
    To Share Capital A/c35,000
    (Being 5,000 shares reissued at the maximum discount)
    1½ marks

Answer: Share Capital Dr. ₹ 56,000 to Share Forfeited ₹ 40,000 and Calls in Arrears ₹ 16,000; Bank ₹ 10,000 and Share Forfeited ₹ 25,000 Dr. to Share Capital ₹ 35,000 (no capital reserve)

Where the marks are

  • Forfeiture entry (1½ marks)
  • Reissue at maximum discount (1½ marks)

Revise the chapter

Practise this chapterBoard-style questions from Accounting for Share Capital, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2024-25: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.