Bright Motors Ltd. was registered with an authorised capital of ₹ 10,00,00,000 divided into equity shares of ₹

Question

Q. Bright Motors Ltd. was registered with an authorised capital of ₹ 10,00,00,000 divided into equity shares of ₹ 100 each. The company issued 3,00,000 shares to the public for subscription. The amount was payable as follows : On application - ₹ 30 per share On allotment - ₹ 50 per share On first and final call - balance All the shares were fully subscribed. All amounts were duly received except from Raman, a holder of 500 shares, who failed to pay the first and final call. Answer the following questions :

(i) Total number of shares into which the authorised share capital of the company is divided, is : (A) 10,00,00,000 (B) 1,00,00,000 (C) 10,00,000 (D) 3,00,000

(ii) Amount of 'Subscribed and fully paid-up capital' of Bright Motors Ltd. will be : (A) ₹ 2,99,50,000 (B) ₹ 3,00,00,000 (C) ₹ 10,00,00,000 (D) ₹ 2,99,90,000

(iii) Amount of 'Subscribed but not fully paid-up capital' of Bright Motors Ltd. will be : (A) ₹ 2,99,90,000 (B) ₹ 2,99,50,000 (C) ₹ 3,00,00,000 (D) ₹ 40,000

(iv) Amount of 'Share Capital' to be presented in the Balance Sheet of Bright Motors Ltd. will be : (A) ₹ 3,00,00,000 (B) ₹ 2,99,50,000 (C) ₹ 2,99,90,000 (D) ₹ 10,00,00,000

(v) If the defaulting 500 shares are forfeited, 'Share Forfeiture Account' will be shown in the 'Notes to Accounts' at : (A) ₹ 10,000 (B) ₹ 40,000 (C) ₹ 50,000 (D) ₹ 5,000

(vi) If all the forfeited shares are reissued @ ₹ 90 per share fully paid-up, the amount credited to Capital Reserve Account will be : (A) ₹ 35,000 (B) ₹ 40,000 (C) ₹ 10,000 (D) ₹ 50,000

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Concept understanding — Share Capital Accounting

Let’s begin with something you already know from everyday life.

Imagine you and two friends decide to start a small business — say, a tiffin service. You each put in some money to buy utensils, a stove, and ingredients. That money you all contributed is the capital of the business. The business doesn’t own that money; it owes it back to you, the owners. In accounting, we call you the shareholders, and the money you put in is share capital.

Now scale that up to a company. A company needs huge amounts of money to build factories, buy machinery, or develop software. It raises this money by selling shares — small units of ownership. When you buy a share, you become a part-owner of that company. The total money collected from all shareholders is the company’s share capital.

Why does share capital matter in accounting?

Because the company is a separate legal person. It does not own the money — the shareholders do. So the company must record exactly how much it has collected from whom, and in what form. This affects the balance sheet (where share capital appears under Equity and Liabilities) and the cash flow (money coming in from shareholders is a financing activity).

The precise meaning (NCERT Class 12)

Share Capital is the money raised by a company by issuing shares to the public or to promoters. It is shown under the head Shareholders’ Funds in the Balance Sheet.

There are two main types of shares:

Equity shares – ordinary shares; owners get dividends only if the company makes profit.
Preference shares – owners get a fixed dividend before equity shareholders, but usually have no voting rights.

Accounting treatment — the journal entries

When a company issues shares, it follows a standard sequence. Let’s say a company issues 10,000 equity shares of ₹10 each at par (i.e., at face value). The money is received in two instalments: ₹4 on application, ₹6 on allotment.

Step 1: Application money received

Date	Particulars	Debit (₹)	Credit (₹)
	Bank A/c Dr.	40,000
	To Share Application A/c		40,000
(Being application money received on 10,000 shares @ ₹4 each)

Step 2: Transfer application money to Share Capital

Date	Particulars	Debit (₹)	Credit (₹)
	Share Application A/c Dr.	40,000
	To Share Capital A/c		40,000
(Being application money transferred to Share Capital)

Step 3: Allotment money due

Date	Particulars	Debit (₹)	Credit (₹)
	Share Allotment A/c Dr.	60,000
	To Share Capital A/c		60,000
(Being allotment money due on 10,000 shares @ ₹6 each)

Step 4: Allotment money received

Date	Particulars	Debit (₹)	Credit (₹)
	Bank A/c Dr.	60,000
	To Share Allotment A/c		60,000
(Being allotment money received)

Note

If shares are issued at a premium (e.g., ₹10 face value, issued at ₹12), the extra ₹2 goes to a separate account called Securities Premium Reserve A/c. It is not part of share capital.

The Balance Sheet format (as per NCERT)

Under Equity and Liabilities, share capital appears like this:

Particulars	Note No.	Amount (₹)
1. Shareholders’ Funds
(a) Share Capital	1	1,00,000
(b) Reserves and Surplus	2	20,000
2. Non-Current Liabilities	...	...
3. Current Liabilities	...	...

And Note 1 (Share Capital) is typically shown as:

Particulars	Amount (₹)
Authorised Capital
1,00,000 Equity Shares of ₹10 each	10,00,000
Issued Capital
80,000 Equity Shares of ₹10 each	8,00,000
Subscribed and Paid-up Capital
80,000 Equity Shares of ₹10 each fully paid	8,00,000

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Bright Motors Ltd. issued 3,00,000 equity shares of ₹100 each; Raman (500 shares) defaulted on final call of ₹20. Authorised capital comprises 10,00,000 shares; subscribed fully paid capital is ₹2,99,90,000, not fully paid is ₹40,000; total share capital ₹2,99,90,000. On forfeiture, Share Forfeiture A/c shows ₹40,000; on reissue at ₹90, Capital Reserve is ₹35,000.

Concept: Share Capital Accounting and Presentation

When a company issues shares, it collects the face value in instalments—application, allotment, and calls. The authorised capital is the maximum capital the company can raise (stated in the Memorandum); the issued and subscribed capital is what the public actually takes up. If a shareholder defaults on any call, those shares become not fully paid-up until either the amount is received or the shares are forfeited.

Accounting treatment:

Application, Allotment, Call receipts: Bank A/c Dr.; To Share Application/Allotment/Call A/c (liability cleared when transferred to Share Capital).
Default on call: The call money due but unpaid remains a receivable (deducted from called-up capital in the Balance Sheet presentation).
Forfeiture: Share Capital A/c Dr. (with the total called-up amount on those shares), To Share Forfeiture A/c (amount already paid by the defaulter—this becomes a capital profit), To Calls-in-Arrears A/c (the unpaid call, now written off).
Reissue of forfeited shares: Bank A/c Dr. (reissue price received), Share Forfeiture A/c Dr. (to the extent of the original forfeiture credit attributable to these shares), To Share Capital A/c (face value of reissued shares). Any balance left in Share Forfeiture A/c after reissue is transferred to Capital Reserve (it is a capital profit, not available for dividend).

Balance Sheet presentation (Schedule III):

Authorised Capital: stated first (number of shares × face value).
Issued, Subscribed and Paid-up Capital: broken into (a) fully paid-up and (b) not fully paid-up (showing the shortfall).
Calls-in-Arrears is deducted (shown in brackets) from called-up capital to arrive at paid-up capital.
Share Forfeiture Account (after forfeiture but before reissue) appears as a reserve in Notes to Accounts under "Reserves and Surplus" or as a credit balance adjusting share capital—it represents the amount already received from defaulters.

Solution

Given Data

Authorised Capital: ₹10,00,00,000 in equity shares of ₹100 each.
Issued and Subscribed: 3,00,000 shares of ₹100 each.
Payment schedule:
- Application: ₹30 per share
- Allotment: ₹50 per share
- First and Final Call: ₹20 per share (balance)
Default: Raman (500 shares) did not pay the First and Final Call of ₹20 per share.

Working Notes

W.N. 1: Number of shares in Authorised Capital

\text{Number of shares} = \frac{\text{Authorised Capital}}{\text{Face Value per share}} = \frac{₹10,00,00,000}{₹100} = 10,00,000 \text{ shares}

W.N. 2: Total amount called-up per share

\text{Called-up per share} = ₹30 + ₹50 + ₹20 = ₹100

(The entire face value of ₹100 has been called.)

W.N. 3: Amount paid by Raman (defaulter)

Raman paid Application (₹30) and Allotment (₹50) but defaulted on Call (₹20).

\text{Amount paid by Raman} = (₹30 + ₹50) \times 500 = ₹40,000

W.N. 4: Amount unpaid (Calls-in-Arrears)

\text{Calls-in-Arrears} = ₹20 \times 500 = ₹10,000

W.N. 5: Subscribed and Fully Paid-up Capital

Shares fully paid = Total subscribed − Raman's shares = 3,00,000 − 500 = 2,99,500 shares.

\text{Fully Paid-up Capital} = 2,99,500 \times ₹100 = ₹2,99,50,000

W.N. 6: Subscribed but Not Fully Paid-up Capital

Raman's 500 shares are not fully paid. The amount called-up on these shares is ₹100 each, but only ₹80 per share has been received.

\text{Called-up on not fully paid shares} = 500 \times ₹100 = ₹50,000

\text{Amount received} = 500 \times ₹80 = ₹40,000

So the not fully paid-up capital (the shortfall/unpaid portion) is:

₹50,000 - ₹40,000 = ₹10,000 \quad \text{(Calls-in-Arrears)}

But the question asks for the amount of "Subscribed but not fully paid-up capital"—this is the called-up amount on those shares (before deducting arrears), which is ₹50,000. However, in Balance Sheet presentation, we show:

Called-up on not fully paid shares: ₹50,000
Less: Calls-in-Arrears: ₹10,000
Paid-up (on not fully paid shares): ₹40,000

The term "Subscribed but not fully paid-up capital" in the options refers to the paid-up amount on those shares, i.e., ₹40,000 (option D in question iii).

Watch out

"Subscribed but not fully paid-up capital" can be ambiguous: it may mean the called-up amount on those shares (₹50,000) or the paid-up amount after deducting arrears (₹40,000). Schedule III presentation shows both: the called-up figure and the deduction. Here, the options suggest the paid-up amount (₹40,000) is the answer.

W.N. 7: Total Share Capital in Balance Sheet

\text{Total Paid-up Capital} = \text{Fully Paid} + \text{Paid on Not Fully Paid shares} = ₹2,99,50,000 + ₹40,000 = ₹2,99,90,000

(This is the net amount after deducting Calls-in-Arrears of ₹10,000 from the total called-up capital of ₹3,00,00,000.)

W.N. 8: Share Forfeiture Account (on forfeiture of 500 shares)

When shares are forfeited, the company cancels the shares and keeps the money already received as a gain (Share Forfeiture A/c, a capital reserve).

Journal entry for forfeiture:

Particulars	Debit (₹)	Credit (₹)
Share Capital A/c Dr.	50,000
To Share Forfeiture A/c		40,000
To Calls-in-Arrears A/c		10,000
(Being 500 shares of ₹100 each forfeited for non-payment of First and Final Call; amount received ₹80 per share transferred to Share Forfeiture A/c)

Share Forfeiture A/c balance = ₹40,000 (the amount already paid by Raman, now a capital profit).

W.N. 9: Reissue of 500 forfeited shares at ₹90 per share as fully paid-up

The company receives ₹90 per share but credits Share Capital A/c with the full face value of ₹100 per share. The shortfall of ₹10 per share is met by debiting Share Forfeiture A/c.

Journal entry for reissue:

Particulars	Debit (₹)	Credit (₹)
Bank A/c Dr.	45,000
Share Forfeiture A/c Dr.	5,000
To Share Capital A/c		50,000
(Being 500 forfeited shares reissued at ₹90 per share as fully paid-up)

Calculation:

Cash received: 500 × ₹90 = ₹45,000 …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 51 on this concept.

CBSE 2026Set 67/3/11 markMCQ
$Q. (a) Paramount Ltd. forfeited 2,000 equity shares of ₹ 100 each, ₹ 80 called up, issued at a premium of 10%, for non-payment of first call of ₹ 20 per share. On forfeiture of these shares, Equity Share Capital Account will be ________ by ________. (A) debited, ₹ 1,60,000 (B) credited, ₹ 1,60,000 (C) debited, ₹ 2,00,000 (D) credited, ₹ 2,00,000$
(OR)
$(b) Rudali Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. ₹ 5 per share (including premium) was payable on application. Applications for 2,60,000 shares were received. An applicant for 5,000 shares paid his entire share money along with application. The amount received on application was : (A) ₹ 10,00,000 (B) ₹ 12,00,000 (C) ₹ 12,35,000 (D) ₹ 13,35,000$
›Reveal solutionSolution
Part (a): Equity Share Capital A/c is debited by ₹1,60,000 — option (A).

Part (b): Amount received on application = ₹13,35,000 — option (D).

Part (a)

Forfeiture reverses Share Capital only to the extent called up, at the called-up value per share.

Called-up per share = ₹80; shares forfeited = 2,000

Equity Share Capital A/c debit = 2,000 × ₹80 = ₹1,60,000 …
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CBSE 2026Set 67/3/11 markMCQ
$Q. (a) On 1st April, 2024, Mobi Ltd. issued 3,000, 9% Debentures of ₹ 1,000 each at a premium of 5%. The total amount of interest due on debentures for the year ended 31st March, 2025 will be : (A) ₹ 2,70,000 (B) ₹ 1,50,000 (C) ₹ 27,000 (D) ₹ 15,000$
(OR)
$(b) A company may reserve a portion of its uncalled capital to be called only in the event of winding up of the company. Such uncalled amount is called : (A) Uncalled capital (B) Paid-up capital (C) Called-up capital (D) Reserve capital$
›Reveal solutionSolution
Part (a): Annual debenture interest = ₹2,70,000 — option (A).

Part (b): The reserved uncalled amount is Reserve Capital — option (D).

Part (a)

Debenture interest is computed on the nominal (face) value, unaffected by the issue premium.

Total face value = 3,000 × ₹1,000 = ₹30,00,000

Interest = 9% × ₹30,00,000 × 1 year = ₹2,70,000 …
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CBSE 2026Set 67/3/11 markMCQ
$Q. Deep Ltd. issued 6,000, 9% Debentures of ₹ 500 each at ₹ 490 per debenture. 9% Debentures Account will be credited by : (A) ₹ 2,70,000 (B) ₹ 6,00,000 (C) ₹ 29,40,000 (D) ₹ 30,00,000$
›Reveal solutionSolution
The 9% Debentures Account is credited by ₹30,00,000 (face value of 6,000 debentures @ ₹500 each), irrespective of the issue price of ₹490.

Concept: Accounting Treatment for Issue of Debentures at a Discount

When a company issues debentures, the Debentures Account (a liability) is always credited with the face value (nominal value) of the debentures, not the issue price. This is because the company's liability to debenture-holders is to repay the face value at maturity, regardless of what they paid at the time of issue.

The accounting entries follow the fundamental rule:

Debit what comes in (Bank receives cash at issue price)

Credit the liability at face value (Debentures Account)

Any difference between face value and issue price is treated separately:

Discount on Issue of Debentures (when issue price < face value) is debited as a capital loss

Premium on Issue of Debentures (when issue price > face value) is credited

In this case, Deep Ltd. issued debentures at a discount of ₹10 per debenture (₹500 − ₹490).

Solution

Working Note 1: Calculation of Face Value

Number of debentures issued = 6,000

Face value per debenture = ₹500

Total Face Value = 6,000 × ₹500 = ₹30,00,000

Working Note 2: Calculation of Issue Price

Issue price per debenture = ₹490

Total Cash Received = 6,000 × ₹490 = ₹29,40,000

Working Note 3: Discount on Issue

Discount per debenture = ₹500 − ₹490 = ₹10

Total Discount = 6,000 × ₹10 = ₹60,000

Journal Entry

Date Particulars L.F. Debit (₹) Credit (₹)
Bank A/c 29,40,000
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CBSE 2026Set 67/4/11 markMCQ
$Q. (a) 6,000 shares of ₹ 25 each were forfeited for non-payment of final call money of ₹ 5 per share. The maximum discount that the company can allow on reissue of these shares will be : (A) ₹ 30,000 (B) ₹ 90,000 (C) ₹ 1,20,000 (D) ₹ 1,50,000$
(OR)
$(b) 5,000 shares of ₹ 20 each were forfeited for non-payment of second and final call of ₹ 4 per share. The minimum amount that the company must collect at the time of reissue of these shares will be : (A) ₹ 20,000 (B) ₹ 80,000 (C) ₹ 1,00,000 (D) ₹ 1,20,000$
›Reveal solutionSolution

Part (a): Maximum discount on reissue = Rs.1,20,000 -> (C). Part (b): Minimum amount to collect on reissue = Rs.20,000 -> (A).

Part (a)

Maximum discount on reissue cannot exceed the amount forfeited. Amount received before forfeiture = 25 - 5 = Rs.20 per share -> 20 x 6,000 = Rs.1,20,000. …
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CBSE 2026Set 67/5/11 markMCQ
$Q. (a) Merak Ltd. forfeited 6,000 equity shares of ₹ 10 each for non-payment of final call of ₹ 3 per share. The minimum amount per share at which these shares can be reissued will be : (A) ₹ 3 (B) ₹ 7 (C) ₹ 10 (D) ₹ 6$
(OR)
$(b) Nori Ltd. issued 20,000, 11% debentures of ₹ 100 each at a premium of 10%, redeemable at a premium of 5%. Loss on issue of debentures account will be debited by : (A) ₹ 20,00,000 (B) ₹ 1,00,000 (C) ₹ 3,00,000 (D) ₹ 2,00,000$
›Reveal solutionSolution
Part (a): Minimum reissue price = ₹3 — option (A).

Part (b): Loss on Issue of Debentures = ₹1,00,000 — option (B).

Part (a)

On forfeiture, the amount already received is credited to the Share Forfeiture Account, and on reissue the discount allowed cannot exceed this balance.

Face value = ₹10; final call unpaid = ₹3

Amount forfeited per share = ₹10 − ₹3 = ₹7 (maximum permissible discount) …
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CBSE 2026Set ANNUAL1 markMCQ
$Q. Purchase of own equity shares by a company is called A) Buy-back of share B) Repayment C) Redemption D) Capitalisation$
›Reveal solutionSolution
A company purchasing its own equity shares is doing a buy-back - option (A).

'Buy-back' means a company repurchasing its own equity shares from its shareholders, usually to return surplus cash, improve earnings per share, or support the share price. It is distinct from:

Redemption (option C) - applies to preference shares and debentures that are repaid on maturity. …
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CBSE 2025Set 67/4/11 markMCQ
$Q. Diksha Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of 10%. The whole amount was payable on application. Applications were received for 3,00,000 equity shares. The company decided to allot the shares on pro-rata basis to all the applicants. The amount refunded by the company was : (A) ₹ 22,00,000 (B) ₹ 33,00,000 (C) ₹ 11,00,000 (D) ₹ 20,00,000$
›Reveal solutionSolution

The amount refunded by Diksha Ltd. is ₹ 22,00,000 (Option A). This is the application money returned to applicants whose shares were not allotted under the pro-rata arrangement.

Concept and Accounting Treatment

When a company receives excess applications for shares, it can either reject the excess or allot shares on a pro-rata (proportionate) basis. Here, Diksha Ltd. received applications for 3,00,000 shares against an issue of 1,00,000 shares — three times the number offered. The company decided to allot shares pro-rata to all applicants.

The key accounting principle: Application money received in excess of the amount due on allotted shares must be refunded. The company cannot retain money for shares it does not issue. The refund is a liability until paid, and is recorded by crediting the Bank Account (when refunded) and debiting the Share Application Account.

Since the entire amount (face value + premium) is payable on application, each applicant paid ₹ 11 per share (₹ 10 face value + ₹ 1 premium). For every 3 shares applied, only 1 share is allotted. So for each group of 3 shares applied (₹ 33 paid), the company keeps ₹ 11 (for the 1 allotted share) and refunds ₹ 22 (for the 2 unallotted shares).

Watch out

Common Pitfall

Students often forget that the premium is also collected on application and must be refunded proportionately. The refund is not just on face value — it includes the entire application money for unallotted shares.

Solution

Step 1: Determine the Pro-rata Ratio

Shares applied: 3,00,000

Shares allotted: 1,00,000

Ratio: For every 3 shares applied, 1 share is allotted.

Step 2: Calculate Application Money Received

Particulars Amount (₹)
Number of shares applied 3,00,000
Application money per share (₹ 10 + ₹ 1 premium) ₹ 11
Total application money received ₹ 33,00,000

Step 3: Calculate Application Money Retained

Particulars Amount (₹)
Number of shares allotted 1,00,000
Application money per share (₹ 10 + ₹ 1 premium) ₹ 11
Application money retained for allotted shares ₹ 11,00,000

Step 4: Calculate Refund Amount

Particulars Amount (₹)
Total application money received ₹ 33,00,000
Less: Application money retained (₹ 11,00,000)
Amount refunded ₹ 22,00,000

Tip

Shortcut

Since only 1 out of every 3 shares applied is allotted, 2/3 of the application money is refunded. 2/3 × ₹ 33,00,000 = ₹ 22,00,000. This works because the application money per share is uniform.

Journal Entry for Refund …
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CBSE 2025Set 67/4/11 markMCQ
$Q. That portion of the called-up capital which has been actually received from the shareholders is called : (A) Issued Capital (B) Reserve Capital (C) Paid-up Capital (D) Nominal/Registered Capital$
›Reveal solutionSolution

The portion of called-up capital actually received from shareholders is Paid-up Capital — option (C).

Concept: Share Capital Classification

When a company is formed, it goes through several stages of capital subscription and collection. Understanding the hierarchy of share capital terms is fundamental to company accounts.

The Authorised/Nominal/Registered Capital is the maximum amount of capital a company is permitted to raise, as stated in its Memorandum of Association. This is the ceiling figure.

Out of this authorised capital, the company may offer only a portion to the public — this is the Issued Capital. Not all authorised capital needs to be issued at once.

When shareholders apply and are allotted shares, the company typically does not demand the full face value immediately. It calls up the amount in instalments — application money, allotment money, and one or more calls. The total amount the company has asked shareholders to pay up to a given point is the Called-up Capital.

Now comes the critical distinction: shareholders may default. Some may not pay the call money when demanded. The amount the company has actually collected — the cash or bank balance received from shareholders against the called-up amount — is the Paid-up Capital.

Watch out

Students often confuse called-up with paid-up. Called-up is what the company asked for; paid-up is what it received. If all shareholders pay promptly, called-up equals paid-up. If there are defaults (calls-in-arrear), paid-up will be less than called-up.

Reserve Capital is a special category: it is that part of uncalled capital which the company, by a special resolution, reserves to be called only in the event of winding up. It cannot be called during the normal life of the company.

Treatment in Books

Paid-up Capital appears on the liabilities side of the Balance Sheet under "Share Capital." It represents the actual equity contribution received and is the true measure of shareholders' investment realised by the company.

The accounting equation reflects this: …
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CBSE 2025Set 67/4/11 markMCQ
$Q. (a) On 1st April, 2024, Bright Ltd. issued 20,000, 11% debentures of ₹ 100 each at a premium of 10%, redeemable at a premium of 10%. Loss on issue of debentures was : (A) ₹ 2,00,000 (B) ₹ 4,00,000 (C) ₹ 20,00,000 (D) ₹ 40,00,000$
(OR)
$(b) Minimum subscription for allotment of shares as per Securities and Exchange Board of India (SEBI) guidelines cannot be less than 90% of _________ capital. (A) Reserve (B) Issued (C) Nominal/Registered (D) Subscribed$
›Reveal solutionSolution

Part (a): (A) ₹2,00,000. Part (b): (B) Issued.

Part (a)

When debentures are redeemable at a premium, the premium payable on redemption is a definite future liability recognised at issue as Loss on Issue of Debentures. Here premium on redemption = 10% of face value = 20,000 × ₹10 = ₹2,00,000. The 10% premium received on issue is a separate credit to Securities Premium Reserve — it is not subtracted from the loss. …
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CBSE 2025Set 67/4/11 markMCQ
$Q. (a) Shivalik Ltd. issued 7% debentures of ₹ 100 each at a discount of 5% on 1st April, 2023. Discount on issue of debentures, ₹ 1,00,000 was completely written off through Statement of Profit and Loss on 31st March, 2024. On issue of debentures, 'Debentures Account' was credited with __________. (A) ₹ 10,00,000 (B) ₹ 20,00,000 (C) ₹ 19,00,000 (D) ₹ 1,00,000$
(OR)
$(b) Keya Ltd. issued 2,00,000, 8% debentures of ₹ 100 each at 10% discount on 1st April, 2023. Interest is payable half-yearly on 30th September and 31st March every year. Interest written off on 31st March, 2024 was : (A) ₹ 16,00,000 (B) ₹ 14,40,000 (C) ₹ 8,00,000 (D) ₹ 7,20,000$
›Reveal solutionSolution

Part (a): (B) ₹20,00,000. Part (b): (A) ₹16,00,000.

Part (a)

On issue, the Debentures Account represents the company's liability at its par (face) value, so it is credited with the full face value; discount is recorded separately in a Discount/Loss on Issue account. Since discount = 5% of face value = ₹1,00,000, face value = 1,00,000 ÷ 5% = ₹20,00,000. …
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CBSE 2025Set 67/5/11 markMCQ
$Q. Jeeta Ltd. forfeited 300 shares of ₹ 100 each for the non-payment of final call of ₹ 10 per share. The amount credited to share forfeiture account will be : (A) ₹ 30,000 (B) ₹ 27,000 (C) ₹ 9,000 (D) ₹ 3,000$
(OR)
$Meeta Ltd. invited applications for issuing 30,000 equity shares of ₹ 10 each. Applications for 29,500 shares were received. Allotment was made in full. A shareholder holding 100 shares failed to pay the first call of ₹ 2 per share. His shares were forfeited. The second call of ₹ 3 per share was not yet made. The amount debited to share capital account, on the forfeiture of shares will be : (A) ₹ 3,00,000 (B) ₹ 2,95,000 (C) ₹ 700 (D) ₹ 300$
›Reveal solutionSolution
Part (a): Share Forfeiture A/c is credited with money already received = 300 × ₹90 = ₹27,000 (B).

Part (b): Share Capital A/c is debited with the called-up value = 100 × ₹7 = ₹700 (C).

Part (a)

When shares are forfeited, the company keeps whatever the defaulting shareholder had already paid. That retained amount is credited to the Share Forfeiture Account.

Jeeta Ltd. forfeited 300 shares of ₹100 each because the final call of ₹10 was not paid. So the shareholder had paid everything except this last ₹10.

Amount paid (received) per share = ₹100 − ₹10 = ₹90

Number of shares = 300

Credit to Share Forfeiture A/c = 300 × ₹90 = ₹27,000

Particulars L.F. Debit (₹) Credit (₹)
Share Capital A/c Dr. 30,000
To Calls-in-Arrears A/c 3,000
To Share Forfeiture A/c 27,000
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CBSE 2025Set 67/5/11 markMCQ
$Q. X Ltd. invited applications for issuing 90,000 equity shares of ₹ 100 each. The amount per share was payable as follows : On Application - ₹ 20 On Allotment - ₹ 50 On First and final call - Balance Applications for 2,00,000 shares were received. An applicant who had applied for 5,000 shares paid the entire share money with the application. The total application money received by the company was : (A) ₹ 44,00,000 (B) ₹ 40,00,000 (C) ₹ 18,00,000 (D) ₹ 90,00,000$
›Reveal solutionSolution
The total application money received by the company is ₹44,00,000 — option (A). It includes the normal application money of ₹20 on all 2,00,000 shares applied for, plus the extra amount the special applicant paid by remitting the full ₹100 per share with the application.

Concept: Money Received at the Application Stage

"Total application money received" is the total cash the company receives along with the applications. Normally each applicant pays only the application money (₹20 per share). But an applicant may choose to pay more — even the full face value — at the time of application; the excess is treated as calls-in-advance, yet it is still cash received with the application.

Working Notes

W.N.1 — Normal application money on all shares applied

Applications were received for 2,00,000 shares at ₹20 per share:

2,00,000 × ₹20 = ₹40,00,000

W.N.2 — Extra amount paid by the special applicant

One applicant for 5,000 shares paid the entire ₹100 per share instead of just ₹20:

Full amount paid = 5,000 × ₹100 = ₹5,00,000

Application money portion (already counted in W.N.1) = 5,000 × ₹20 = ₹1,00,000

Extra received with the application = ₹5,00,000 − ₹1,00,000 = ₹4,00,000 (allotment ₹50 + call ₹30 = ₹80 per share × 5,000)

W.N.3 — Total money received with applications

| Particulars | Amount (₹) | …
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Concept understanding — Share Capital Accounting

Why does share capital matter in accounting?

The precise meaning (NCERT Class 12)

Accounting treatment — the journal entries

Step 1: Application money received

Step 2: Transfer application money to Share Capital

Step 3: Allotment money due

Step 4: Allotment money received

The Balance Sheet format (as per NCERT)

Share Capital Accounting – Bright Motors Ltd.

(i) Total number of shares in authorised capital

(ii) Subscribed and fully paid-up capital

(iii) Subscribed but not fully paid-up capital

(iv) Share Capital in Balance Sheet

(v) Share Forfeiture Account after forfeiture …

Concept: Share Capital Accounting and Presentation

Solution

Given Data

Working Notes

Part (a)

Part (a)

Concept: Accounting Treatment for Issue of Debentures at a Discount

Solution

Journal Entry

Part (a)

Part (a)

Concept and Accounting Treatment

Solution

Step 1: Determine the Pro-rata Ratio

Step 2: Calculate Application Money Received

Step 3: Calculate Application Money Retained

Step 4: Calculate Refund Amount

Journal Entry for Refund …

Concept: Share Capital Classification

Treatment in Books

Part (a)

Part (a)

Part (a)

Concept: Money Received at the Application Stage

Working Notes

Particulars	Amount (₹)
Number of shares applied	3,00,000
Application money per share (₹ 10 + ₹ 1 premium)	₹ 11
Total application money received	₹ 33,00,000

Particulars	Amount (₹)
Number of shares allotted	1,00,000
Application money per share (₹ 10 + ₹ 1 premium)	₹ 11
Application money retained for allotted shares	₹ 11,00,000

Particulars	Amount (₹)
Total application money received	₹ 33,00,000
Less: Application money retained	(₹ 11,00,000)
Amount refunded	₹ 22,00,000

Particulars	Debit (₹)	Credit (₹)
Share Capital A/c Dr.	30,000
To Calls-in-Arrears A/c		3,000
To Share Forfeiture A/c		27,000

Concept: Share Capital Accounting and Presentation

Solution

Given Data

Working Notes

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