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A company forfeited… (Class 12 Accountancy SQP 2024-25, Q21)

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AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 4 marks · Very short answer

CBSE Class 12 Accountancy sample paper 2024-25: question 21

From the official CBSE sample question paper for 2024-25, section A, question 21, for 4 marks. Try it first; the hints and our step-by-step solution are below.

Q21 · 4 marks · Very short answerAccounting for Share Capital

A company forfeited certain number of shares of Face Value ₹ 10 each, for non-payment of final call money of ₹ 4. These shares were reissued at a discount of ₹ 5 and amount of ₹ 4500 was transferred to capital Reserve account. Pass the necessary journal entries to show the above transactions and prepare Share forfeited account.

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

How much was paid on each share before the final call?

Hint 2

Gain per reissued share = forfeited amount − discount.

Hint 3

Divide the capital reserve by the gain per share to find the number of shares.

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. ₹ 6 was paid on each share (₹ 10 less the ₹ 4 final call). Reissue at ₹ 5 discount leaves ₹ 1 per share for Capital Reserve, so ₹ 4,500 / ₹ 1 = 4,500 shares.

    ParticularsDr. (₹)Cr. (₹)
    Share Capital A/c Dr.45,000
    To Share Forfeited A/c27,000
    To Share Final Call A/c18,000
    (Being 4,500 shares forfeited)
    1 mark

  2. Reissue of 4,500 shares at ₹ 5 each.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.22,500
    Share Forfeited A/c Dr.22,500
    To Share Capital A/c45,000
    (Being 4,500 shares reissued at ₹ 5 discount)
    1 mark

  3. Transfer of gain (₹ 6 − ₹ 5 = ₹ 1 a share).

    ParticularsDr. (₹)Cr. (₹)
    Share Forfeited A/c Dr.4,500
    To Capital Reserve A/c4,500
    (Being gain on reissue transferred to Capital Reserve)
    1 mark

  4. Share Forfeited Account

    Particulars₹Particulars₹
    To Share Capital A/c22,500By Share Capital A/c27,000
    To Capital Reserve A/c4,500
    27,00027,000
    1 mark

Answer: 4,500 shares: Share Capital ₹ 45,000 to Forfeited ₹ 27,000 and Final Call ₹ 18,000; Bank ₹ 22,500 and Forfeited ₹ 22,500 to Share Capital ₹ 45,000; Forfeited ₹ 4,500 to Capital Reserve

Where the marks are

  • Forfeiture entry (1 mark)
  • Reissue entry (1 mark)
  • Capital reserve entry (1 mark)
  • Share Forfeited Account (1 mark)

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.