In this topic
Learning outcomes
- Explain the relevant accounting rule and terminology.
- Prepare a correctly classified calculation or statement.
- Show working notes and verify the debit-credit or balance check.
Key vocabulary
Concepts to know
Maximum share capital stated in the company’s constitutional documents.
Shares offered to the public / shares taken up by applicants.
Amount called but not received; interest on arrears is excluded from the current syllabus.
Cancellation of shares for non-payment of calls after due procedure under the issue terms.
Core notes
Application, allotment and calls
Record application money when received, transfer it to Share Application on allotment, and refund or adjust excess application as directed. Allotment money and each call are recorded separately. Share capital is credited with the nominal value called; Securities Premium is credited only when premium becomes due under the terms.
For oversubscription, identify the treatment of excess: refund, pro-rata adjustment against allotment, or a combination. Allocate applicants and money consistently. A call in advance is a liability until the call becomes due; a call in arrears is unpaid called-up capital.
Core notes
Forfeiture and reissue
At forfeiture, debit Share Capital with the called-up amount on forfeited shares; credit unpaid calls; credit Share Forfeiture with the amount already received on capital. If premium was due but unpaid, reverse the premium receivable as appropriate. On reissue, debit Bank for proceeds, debit Share Forfeiture for any discount allowed, and credit Share Capital for called-up amount. Discount on reissue cannot exceed forfeiture amount relating to those shares.
Transfer the remaining forfeiture balance for reissued shares to Capital Reserve. Do not transfer forfeiture relating to shares not yet reissued. Present share capital disclosures in the company balance sheet format as prescribed.
Worked example
Step-by-step illustration
1,000 shares of ₹10 each are issued at par. Application ₹3, allotment ₹4, final call ₹3. All amounts are received except the final call on 100 shares.
| Entry | Dr (₹) | Cr (₹) |
|---|---|---|
| Bank Dr. / To Share Application | 3,000 | 3,000 |
| Share Application Dr. / To Share Capital | 3,000 | 3,000 |
| Share Allotment Dr. / To Share Capital | 4,000 | 4,000 |
| Bank Dr. / To Share Allotment | 4,000 | 4,000 |
| Share Final Call Dr. / To Share Capital | 3,000 | 3,000 |
| Bank Dr. ₹2,700; Calls in Arrears Dr. ₹300 / To Share Final Call | 3,000 | 3,000 |
Board preparation
Original practice questions
- Show application and allotment treatment when excess application money is adjusted pro-rata.
- Pass the forfeiture and reissue entries for shares issued at par.
- Why can the reissue discount not exceed the forfeited amount on those shares?
Prepare a share-wise call schedule before journalising. Separate nominal value, premium, amount received, calls unpaid and forfeiture balance.
These are original practice questions, not claimed previous-year questions. Follow the exact method and rounding instructions in your prescribed text and school guidance.
Current syllabus
How this topic fits the course
Accounting for Companies is part of the CBSE Class XII Accountancy course structure. Computerised Accounting is an alternative to Financial Statement Analysis, not an additional compulsory unit.
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