Worksheets › Class 12 › Accounting for Share Capital › Cheat sheet
Class 12 Accounting for Share Capital: cheat sheet
CBSE Accountancy. Kinds of share capital, issue at par and at a premium, pro-rata allotment, calls in arrears, forfeiture and reissue of shares, and capital reserve.
Key ideas
- Authorised capital is the most a company may issue; issued, subscribed, called-up and paid-up capital are each part of the one before.
- Preference shares come first for a fixed dividend and repayment; equity shares vote, take what is left and are repaid last.
- Securities premium is not revenue: it may pay for bonus shares or write off preliminary expenses and loss on debentures, never dividends.
- On forfeiture, debit Share Capital with the amount called up, credit the unpaid calls, and credit Share Forfeiture with what was paid.
- On reissue, the discount (at most the amount forfeited) is debited to Share Forfeiture; the rest on those shares goes to Capital Reserve.
Remember
| Due on allotment | shares allotted × (allotment money + premium) |
| Excess application money (pro rata) | (shares applied for − shares allotted) × application money, adjusted on allotment |
| Calls in arrears | shares not paid for × call per share; paid-up = called-up − arrears |
| Credited to Share Forfeiture | shares forfeited × capital paid per share |
| Capital Reserve on reissue | shares reissued × (forfeited per share − discount per share) |
| Share capital in the balance sheet | subscribed and fully paid + forfeited shares amount |
Watch out
- Debiting Securities Premium on forfeiture when the premium had already been received.
- Moving the whole forfeiture balance to Capital Reserve when only some shares are reissued.
Worked example
Silverline Ltd issued shares of ₹10 each, payable ₹2 on application, ₹3 on allotment and ₹5 on first and final call. A holder of 1,600 shares paid only the application money, and the shares were forfeited after the call. 900 of them were reissued at ₹9 per share, fully paid. Pass the journal entries for the forfeiture, the reissue and the transfer to Capital Reserve.
Working: forfeited ₹3,200; on reissued shares 900 × (₹2 − ₹1) = ₹900 to Capital Reserve; balance ₹1,400 stays in Share Forfeiture
Answer: (i) Equity Share Capital A/c Dr. ₹16,000 To Equity Share Allotment A/c ₹4,800 To Equity Share First and Final Call A/c ₹8,000 To Share Forfeiture A/c ₹3,200 (ii) Bank A/c Dr. ₹8,100 Share Forfeiture A/c Dr. ₹900 To Equity Share Capital A/c ₹9,000 (iii) Share Forfeiture A/c Dr. ₹900 To Capital Reserve A/c ₹900
Practise Accounting for Share Capital
Revise with this page, then practise: every Accounting for Share Capital sheet in the app is new, with an answer key and working.
Coming soon for Android and iPhone.