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The correct order of the following events is:

(A) Forfeiture of shares

(B) Capital Reserve

(C) Calls in arrears

(D) Reissue of shares

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

The chain begins when a shareholder fails to pay a call, creating calls in arrears (C). Continued default lets the directors forfeit the shares (A). Forfeited shares are then reissued (D). Only after reissue is the surplus in Share Forfeiture A/c transferred to Capital Reserve (B).

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