Company Accounts

Share Capital

Medium

common

In the Journal Entry of forfeiture of shares issued at a premium, the Share Capital Account is :-

Debited with the called up amount (including premium)

Debited with the face value amount (including premium)

Debited with the face value amount (excluding premium)

Debited with the called up amount (excluding premium)

✅ Correct Option: 4

When shares issued at a premium are forfeited, the Share Capital Account is debited with the called-up amount (excluding premium).

The Share Capital Account represents only the nominal/face value of shares. Since premium is not part of the share capital, it is dealt with separately through the Securities Premium Account.

At the time of forfeiture, the journal entry is:

Share Capital A/c → Debited with called-up amount (excluding premium)

Securities Premium A/c → Debited with premium received (if any)

Share Forfeiture A/c → Credited with total amount received

Calls-in-Arrears A/c → Credited with unpaid amount

Note that we use called-up amount and not the full face value because shares may not be fully called up at the time of forfeiture. We can only debit Share Capital Account for the portion that was actually called.

For example, if a share of ₹10 face value issued at ₹2 premium has ₹8 called up (excluding premium), and the shareholder paid ₹6 (including ₹2 premium), then:

Share Capital A/c is debited with ₹8 (called-up amount, excluding premium)
Securities Premium A/c is debited with ₹2
Share Forfeiture A/c is credited with ₹6
Calls-in-Arrears A/c is credited with ₹4

2025: 2 June Shift 2

Securities premium can be utilized for

(A) Writing of preliminary expenses.

(B) Issue of bonus share.

(D) Buy back of shares.

Choose the correct answer from the options given below:

2025: 15 May Shift 1

While issuing the share capital for public subscription where there is no articles of association of its own, the following provisions of Table A will apply:

(A) A period of one month must elapse between two calls.

(B) The amount of call should not exceed 25% of the face value of the share.

(D) Calls must be made on a uniform basis on all shares within the same class.

Choose the correct answer from the options given below:

2026: 21 May Shift 2

Manser Company Ltd., New Delhi, has registered its capital as Rs. 40,00,000, divided into 4,00,000 shares of Rs. 10 each. The company offered the public a subscription of 2,00,000 shares of Rs. 10 each. The company received applications for 2,00,000 shares. The company did not make the final call of Rs.2 per share. The company received all the amount except 2,000 shares where share first call money of Rs 3 per share has not been received. Share capital to be shown in balance sheet of Manser Company Ltd. will be:

2025: 3 June Shift 1

From an accounting point of view, arrange the following share capital of the company in the correct sequence:

(A) Subscribed Capital

(B) Authorized Capital

(D) Issued Capital

Choose the correct answer from the options given below:

2026: 21 May Shift 1

Over Subscription means when applications received for shares of a company are more than the number of shares offered to the public for subscription. Identify correct statements regarding over subscription.

(A) This happens in respect of the share issue of well-managed and financially strong companies.

(B) The problem of over subscription is resolved with the forfeiture of shares.

(D) The problem of over subscription is usually resolved with the allotment of shares.

Choose the correct answer from the options given below:

2025: 27 May Shift 2

A company purchase its own shares of Rs 5,00,000 from the market. What this process is called ?

In the Journal Entry of forfeiture of shares issued at a premium, the Share Capital Account is :-

Solution

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