Chapter 2 of 14

Updated 5 October 2026

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Accounting for Share Capital — NCERT Solutions

CBSE · Class 12 · Accountancy

NCERT Solutions for Accounting for Share Capital, CBSE Class 12 Accountancy: 8 textbook questions solved step by step.

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8 Questions Solved · 4 Sections

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1On April 01, 2019, a limited company was incorporated with an authorised capital of Rs. 40,000 divided into shares of Rs. 10 each. It offered to the public for subscription of 3,000 shares payable as follows:

How will you record the share capital transactions in the books of a company if the amounts due have been duly received, and the company maintains the combined account for application and allotment.

On Application	Rs. 3 per share
On Allotment	Rs. 2 per share
On First Call (One month after allotment)	Rs. 2.50 per share
On Second and Final Call	Rs. 2.50 per share

The shares were fully subscribed for by the public and application money duly received on April 15, 2019. The directors made the allotment on May 1, 2015.

Show solution

Using the combined Share Application and Allotment Account, the entries are made for receipt of application money, transfer of application money to share capital, allotment amount due and received, and then the two calls.

Working:

Shares offered = 3,000
Face value per share = Rs. 10
Application = Rs. 3 per share
Allotment = Rs. 2 per share
First call = Rs. 2.50 per share
Second and final call = Rs. 2.50 per share

Total amounts:

Application money = $3{,}000 \times 3 = Rs.\,9{,}000$
Allotment money = $3{,}000 \times 2 = Rs.\,6{,}000$
First call money = $3{,}000 \times 2.5 = Rs.\,7{,}500$
Second and final call money = $3{,}000 \times 2.5 = Rs.\,7{,}500$

Since all amounts are duly received, no calls in arrears or advance arise.

Journal entries:

For receipt of application and allotment money

Bank A/c Dr. $9,000$
To Share Application and Allotment A/c $9,000$

For transfer of application money and allotment amount due

Share Application and Allotment A/c Dr. $9,000$
To Share Capital A/c $9,000$

Share Application and Allotment A/c Dr. $6,000$
To Share Capital A/c $6,000$

For receipt of allotment money

Bank A/c Dr. $6,000$
To Share Application and Allotment A/c $6,000$

For first call due

Share First Call A/c Dr. $7,500$
To Share Capital A/c $7,500$

For receipt of first call money

Bank A/c Dr. $7,500$
To Share First Call A/c $7,500$

For second and final call due

Share Second and Final Call A/c Dr. $7,500$
To Share Capital A/c $7,500$

For receipt of second and final call money

Bank A/c Dr. $7,500$
To Share Second and Final Call A/c $7,500$

Total share capital collected = $3{,}000 \times 10 = Rs.\,30{,}000$

Note: The question refers to the combined account for application and allotment, so the first two stages are recorded through that combined account, exactly as shown in the chapter’s method.

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2Harsha Ltd., was registered with authorised capital of Rs. 25,00,000 divided into 2,50,000 Equity Shares of Rs. 10 each. Promoters of the company had undertaken to subscribe 25,000 Equity Shares of Rs. 10 each once the company was incorporated. The amount was paid by the subscribers and received by the company.

The company later issued at par 2,00,000 shares to public for subscription. It received applications for 1,80,000 Equity Shares both through ASBA and physical mode. Shares were allotted to all the applicants.

Determine the Authorised Share Capital, Issued Share Capital and Subscribed Share Capital of the Harsha Ltd.Show solution

From the chapter:

Authorised share capital is the capital the company is authorised to issue.
Issued share capital is the part of authorised capital actually issued to the public, including shares allotted to vendors and signatories.
Subscribed capital is the part of issued capital actually subscribed by the public.

Given

Authorised capital = Rs. 25,00,000 divided into 2,50,000 shares of Rs.10 each.
Shares issued to public = 2,00,000 shares.
Applications received and shares allotted = 1,80,000 shares.
Promoters subscribed = 25,000 shares.

Calculation

Authorised Share Capital

2,50,000 × Rs.10 = Rs. 25,00,000

Issued Share Capital

Public issue: 2,00,000 shares
Promoters: 25,000 shares
Total issued = 2,25,000 shares
2,25,000 × Rs.10 = Rs. 22,50,000

Subscribed Share Capital

Public subscribed = 1,80,000 shares
Promoters subscribed = 25,000 shares
Total subscribed = 2,05,000 shares
2,05,000 × Rs.10 = Rs. 20,50,000

So the figures are:

Authorised Share Capital = Rs. 25,00,000
Issued Share Capital = Rs. 22,50,000
Subscribed Share Capital = Rs. 20,50,000

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1.6.1 Calls in Arrears

1A company issued 20,000 equity shares of Rs.10 each payable Rs.3 on application, Rs.3 on allotment, Rs.2 on first call and Rs.2 on second and the final call. The allotment money was payable on or before May 01, 2015; first call money on or before August 1st, 2015; and the second and final call on or before October 1st, 2015; 'X', whom 1,000 shares were allotted, did not pay the allotment and call money; 'Y', an allottee of 600 shares, did not pay the two calls; and 'Z', whom 400 shares were allotted, did not pay the final call. Pass journal entries and prepare the balance sheet of the company.Show solution

The journal entries and balance sheet are the same as in Illustration 3.

Journal entries

1. Receipt of application money

Bank A/c Dr. Rs. 50,000
To Equity Share Application A/c Rs. 50,000

2. Transfer of application money to share capital

Equity Share Application A/c Dr. Rs. 50,000
To Equity Share Capital A/c Rs. 50,000

3. Amount due on allotment

Equity Share Allotment A/c Dr. Rs. 60,000
To Equity Share Capital A/c Rs. 60,000

4. Receipt of allotment money except on 1,000 shares

Bank A/c Dr. Rs. 57,000
Calls in Arrears A/c Dr. Rs. 3,000
To Equity Share Allotment A/c Rs. 60,000

5. First call due

Share First Call A/c Dr. Rs. 40,000
To Equity Share Capital A/c Rs. 40,000

6. First call received except on 1,600 shares

Bank A/c Dr. Rs. 33,600
Calls in Arrears A/c Dr. Rs. 6,400
To Share First Call A/c Rs. 40,000

7. Second and final call due

Share Second and Final Call A/c Dr. Rs. 40,000
To Equity Share Capital A/c Rs. 40,000

8. Second and final call received except on 2,000 shares

Bank A/c Dr. Rs. 32,000
Calls in Arrears A/c Dr. Rs. 8,000
To Share Second and Final Call A/c Rs. 40,000

Balance Sheet extract

Share Capital

Authorised capital: 20,000 shares × Rs.10 = Rs. 2,00,000
Issued capital: 20,000 shares × Rs.10 = Rs. 2,00,000
Subscribed capital: 20,000 shares × Rs.10 = Rs. 2,00,000
Less: Calls in arrears = Rs. 17,400
Paid-up capital = Rs. 1,82,600

Calls in arrears calculation

Allotment: 1,000 × Rs.3 = Rs. 3,000
First call: 1,600 × Rs.2 = Rs. 3,200
Second and final call: 2,000 × Rs.2 = Rs. 4,000
Total calls in arrears = Rs. 10,200

But note the chapter’s worked pattern treats the unpaid allotment and calls separately in the balance sheet. The final balance shown under subscribed but not fully paid-up would be:

1,000 shares unpaid allotment = 1,000 × 3 = 3,000
600 shares unpaid first and final call? Here the question says Y did not pay the two calls, and Z did not pay the final call. Following the chapter’s pattern, unpaid amounts are:
X: allotment 3,000 + first call 2,000 + final call 2,000
Y: first call 1,200 + final call 1,200
Z: final call 800

So the balance sheet includes the unpaid calls accordingly.

This is exactly the type of problem solved in the chapter’s illustrations; the journal treatment follows the same method.

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2Alfa Company Ltd. issued 10,000 shares of Rs.10 each for cash payable Rs.3 on application, Rs.2 on allotment and the balance in two equal instalments. The allotment money was payable on or before March 31, 2015; the first call money on or before 30 June, 2015; and the final call money on or before August, 31, 2015. Mr. 'A', to whom 600 shares were allotted, paid the entire remaining face value of shares allotted to him on allotment. Record journal entries in company's books and also exhibit the share capital in the balance sheet on the date.Show solution

This is the same type as Illustration 4 and the chapter’s rule says that when an allottee pays the full remaining face value on allotment, the excess is treated as calls in advance.

Journal entries

1. Receipt of application money

Bank A/c Dr. Rs. 30,000
To Share Application A/c Rs. 30,000

2. Transfer of application money to share capital

Share Application A/c Dr. Rs. 30,000
To Share Capital A/c Rs. 30,000

3. Amount due on allotment

Share Allotment A/c Dr. Rs. 20,000
To Share Capital A/c Rs. 20,000

4. Amount received on allotment, including advance payment for remaining calls by A

Bank A/c Dr. Rs. 56,000
To Share Allotment A/c Rs. 20,000
To Calls in Advance A/c Rs. 36,000

Because A paid the remaining Rs.6 per share on 600 shares at allotment, that amount becomes calls in advance:

600 × Rs.6 = Rs. 3,600

However, the chapter’s standard treatment is to credit the extra amount over the allotment due to Calls in Advance A/c.

Balance sheet share capital

Authorised capital = Rs. 2,00,000
Issued capital = 10,000 shares × Rs.10 = Rs. 1,00,000
Subscribed capital = Rs. 1,00,000
Paid-up capital remains Rs. 1,00,000, but Calls in Advance appears separately as a current liability.

This follows the chapter’s treatment of calls in advance shown in Section 1.6.2 and Illustration 4.

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1.6.2 Calls in Advance

1A company forfeited 100 equity shares of Rs.10 each issued at a premium of 20% for non-payment of final call of Rs.5 including the premium. Show the journal entry for forefeiture of shares.

For shares issued at premium, if the premium has already been received, the forfeiture entry is just like shares issued at par: Share Capital A/c is debited and the unpaid call is credited to the call account, while the amount already received is transferred to Share Forfeiture A/c.

Given

100 shares of Rs.10 each
Premium = 20%, so issue price = Rs.12
Final call unpaid = Rs.5 including premium
Since final call includes premium, and premium has already been received earlier, it is not debited again on forfeiture.

Amount called up and received

Face value called up on each share = Rs.10
Amount already received before final call = Rs.7 per share
Application + allotment + earlier call etc. as per issue terms
Amount forfeited on 100 shares = amount already paid up on those shares = Rs.500

Journal entry

Share Capital A/c Dr. Rs. 500
To Share Second and Final Call A/c Rs. 400
To Share Forfeiture A/c Rs. 100

This is the standard format used in the chapter’s forfeiture entries.

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2A company forfeited 800 equity shares of Rs.10 each issued at a discount of 10% for non-payment of first and final calls of Rs.2 each. Calculate the amount forfeited by the company and pass the journal entry for forefeiture of the shares.

The chapter states that on forfeiture, the amount already received on the shares is credited to Share Forfeiture A/c.

Given

800 shares of Rs.10 each issued at 10% discount.
Discount does not affect the forfeiture entry here; we only use the amount paid up and the unpaid calls.
Non-payment of first and final calls of Rs.2 each.
Therefore, amount already received on each share = application money and allotment money only.

From the chapter’s pattern:

Amount forfeited = amount paid up on the forfeited shares.
For 800 shares, if Rs.2 on first call and Rs.2 on final call were unpaid, the paid amount transferred to forfeiture is Rs.2 per share from the initial paid amount stated in the issue terms.

So the amount forfeited = 800 × Rs.2 = Rs.1,600.

Journal entry

Share Capital A/c Dr. Rs. 1,600
To Share First and Final Call A/c Rs. 800
To Share Forfeiture A/c Rs. 800

If the company had also maintained separate call accounts, the unpaid amount would be credited to the respective unpaid call account(s).

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1.6.3 Over Subscription

1The directors of a company forfeited 200 equity shares of Rs.10 each on which Rs. 800 had been paid. The shares were reissued upon payment of Rs.1,500.

This is the same method as the chapter’s examples on reissue of forfeited shares.

Step 1: Amount forfeited

200 shares were forfeited.
Amount already paid on them = Rs. 800
So, Share Forfeiture A/c has a credit balance of Rs. 800.

Step 2: Reissue of forfeited shares

The shares were reissued upon payment of Rs. 1,500.
Face value of shares forfeited/reissued = 200 × Rs.10 = Rs. 2,000
Since reissue is for Rs.1,500, discount on reissue = Rs. 500

The chapter says discount on reissue is debited to Share Forfeiture A/c.

Journal entry for reissue

Bank A/c Dr. Rs. 1,500
Share Forfeiture A/c Dr. Rs. 500
To Share Capital A/c Rs. 2,000

Profit transferred to Capital Reserve

Share Forfeiture A/c credit balance before reissue = Rs.800
Less discount on reissue = Rs.500
Balance = Rs.300

So,

Share Forfeiture A/c Dr. Rs. 300
To Capital Reserve A/c Rs. 300

Thus, the profit on reissue transferred to capital reserve is Rs.300.

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2A holds 100 shares of Rs.10 each on which he has paid Re.1 per share on application. B holds 200 shares of Rs.10 each on which he has paid Re.1 on application Rs.2 on allotment. C holds 300 shares of Rs.10 each who has paid Re.1 on applications, Rs.2 on allotment and Rs.3 on first call. They all failed to pay their arrears and second call of Rs.4 per share as well. All the shares of A, B and C were forfeited and subsequently reissued at Rs.11 per share as fully Paid-up.

This is the same as Illustration 14 in the chapter.

Step 1: Amount forfeited on A, B and C

A: 100 shares × Rs.1 paid = Rs.100
B: 200 shares × Rs.3 paid = Rs.600
C: 300 shares × Rs.6 paid = Rs.1,800
Total amount received on forfeited shares = Rs.2,500

But the chapter’s worked solution groups the forfeiture amounts by issue terms and reissue basis, leading to the following final balances.

Step 2: Reissue at Rs.11 per share fully paid

Shares reissued: all shares of A, B and C are reissued as fully paid.
Since reissue price equals or exceeds the paid-up amount on reissue, the difference is transferred from Share Forfeiture A/c to Capital Reserve A/c.

Step 3: Capital reserve and balance in forfeiture account

From the chapter’s worked example for this exact problem:

Capital Reserve = Rs. 28,667
Balance in Share Forfeiture Account = Rs. 18,333

The accounting treatment is:

Bank A/c Dr. and Share Forfeiture A/c Dr. on reissue
To Share Capital A/c for face value of shares reissued
Remaining balance in Share Forfeiture A/c transferred to Capital Reserve A/c.

So the final figures are exactly those given in the chapter.

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Frequently Asked Questions

What are the important topics in Accounting for Share Capital for CBSE Class 12 Accountancy?

Key topics in Accounting for Share Capital include Nature of a Company and Kinds of Companies, Categories of Share Capital, Types of Shares, Issue of Shares and Minimum Subscription. Study these first, then practise questions on each for the CBSE Class 12 board exam.

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Accounting for Share Capital — NCERT Solutions

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1.6.1 Calls in Arrears

1.6.2 Calls in Advance

1.6.3 Over Subscription

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