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Answer the following. (Class 12 Accountancy 2026, Q25b)

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AccountancyCBSE Class 12 · Board exam 2026, set 67/5/1 · 6 marks · Long answer

CBSE Class 12 Accountancy 2026: question 25(b)

Set in the CBSE Class 12 board exam of 2026, paper 67/5/1, section A, question 25(b), for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q25(b) · 6 marks · Long answerAccounting for Share Capital

Answer the following.

  1. (i)

    Rao Ltd. forfeited 750 equity shares of ₹ 10 each for non-payment of first call of ₹ 3 per share (including premium of ₹ 1 per share). The second and final call of ₹ 3 per share was not yet made. Of the forfeited shares, 500 were re-issued for ₹ 2,500, ₹ 7 per share paid-up.
    Pass necessary journal entries for the above transactions in the books of Rao Ltd.

    3 marks
  2. (ii)

    Lily Ltd. forfeited 2,000 equity shares of ₹ 10 each for non-payment of first and final call of ₹ 2 per share. 750 of the forfeited shares were reissued to Ashok for ₹ 10,000 as fully paid-up. The remaining shares were reissued to Sudha at ₹ 9 per share fully paid-up.
    Pass necessary journal entries for the above transactions in the books of Lily Ltd.

    3 marks

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 67/5/1.

Hints

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

Hint 1

On forfeiture, reverse the unpaid premium too if it was called but not received.

Hint 2

Reissue above face value creates fresh securities premium; it is not a gain from forfeiture.

Hint 3

Capital Reserve = forfeited amount on reissued shares − discount allowed.

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. (i) Rao Ltd. Called up = ₹ 7 per share capital (₹ 1 premium on first call unpaid). Received ₹ 5 per share capital. Forfeiture = 750 × 5 = ₹ 3,750; unpaid call ₹ 2,250.

    ParticularsDr. (₹)Cr. (₹)
    Equity Share Capital A/c Dr.5,250
    Securities Premium A/c Dr.750
    To Share Forfeiture A/c3,750
    To Equity Share First Call A/c2,250
    (Being 750 shares forfeited for non-payment of first call)
    1 mark

  2. Reissue of 500 shares as ₹ 7 paid for ₹ 2,500: discount ₹ 1,000 from forfeiture.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.2,500
    Share Forfeiture A/c Dr.1,000
    To Equity Share Capital A/c3,500
    (Being 500 shares reissued, ₹ 7 paid up)
    1 mark

  3. Forfeited on 500 shares = 500 × 5 = 2,500, less discount 1,000 = ₹ 1,500 to Capital Reserve.

    ParticularsDr. (₹)Cr. (₹)
    Share Forfeiture A/c Dr.1,500
    To Capital Reserve A/c1,500
    (Being gain on reissue transferred)
    1 mark

  4. (ii) Lily Ltd. Paid ₹ 8 per share: forfeiture = ₹ 16,000.

    ParticularsDr. (₹)Cr. (₹)
    Equity Share Capital A/c Dr.20,000
    To Share Forfeiture A/c16,000
    To Equity Share First and Final Call A/c4,000
    (Being 2,000 shares forfeited)
    1 mark

  5. Ashok pays ₹ 10,000 for 750 shares (₹ 7,500 capital + ₹ 2,500 premium). Sudha pays ₹ 9 on 1,250 shares: ₹ 11,250, discount ₹ 1,250.

    ParticularsDr. (₹)Cr. (₹)
    Bank A/c Dr.10,000
    To Equity Share Capital A/c7,500
    To Securities Premium A/c2,500
    (Being 750 shares reissued to Ashok at a premium)
    Bank A/c Dr.11,250
    Share Forfeiture A/c Dr.1,250
    To Equity Share Capital A/c12,500
    (Being 1,250 shares reissued to Sudha at ₹ 9)
    1 mark

  6. All forfeited shares are reissued: 16,000 − 1,250 = ₹ 14,750 to Capital Reserve.

    ParticularsDr. (₹)Cr. (₹)
    Share Forfeiture A/c Dr.14,750
    To Capital Reserve A/c14,750
    (Being gain on reissue transferred)
    1 mark

Answer: (i) Forfeiture ₹ 3,750; reissue Bank ₹ 2,500 + Forfeiture ₹ 1,000; Capital Reserve ₹ 1,500 (ii) Forfeiture ₹ 16,000; Ashok ₹ 10,000 (capital ₹ 7,500, premium ₹ 2,500); Sudha ₹ 11,250 + Forfeiture ₹ 1,250; Capital Reserve ₹ 14,750

Where the marks are

  • (i) Forfeiture, reissue and capital reserve (1 mark each)
  • (ii) Forfeiture, reissues and capital reserve (1 mark each)

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 paper2026 board paper, set 67/5/1: 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.