Forfeiture and reissue of shares: Class 12 practice
On forfeiture, the amount already received on those shares goes to Share Forfeiture account. Read the method, follow the three worked examples, then try the six questions.
What you should know first
- Share issue entries
The idea behind forfeiture and reissue of shares
On forfeiture, the amount already received on those shares goes to Share Forfeiture account. On reissue at a discount, the discount is written off from Share Forfeiture; any balance left on reissued shares is transferred to Capital Reserve.
Step-by-step method
- Amount forfeited = shares × money received per share.
- Discount on reissue comes out of forfeiture.
- Capital reserve = forfeited amount on reissued shares − discount.
Worked example 1 (Basic)
400 shares of ₹10 on which ₹8 per share was paid are forfeited. Find the share forfeiture amount.
- 400 × ₹8
- = ₹3,200
- Answer: ₹3,200
Worked example 2 (Standard)
800 forfeited shares (₹5 paid each) — 800 of them are reissued at ₹7 per share fully paid. Find the amount transferred to capital reserve.
- Forfeited on reissued shares = 800 × 5 = ₹4,000
- Discount = 800 × 3 = ₹2,400
- Capital reserve = ₹1,600
- Answer: ₹1,600
Worked example 3 (Challenge)
700 forfeited shares (₹8 paid each) — 350 of them are reissued at ₹3 per share fully paid. Find the amount transferred to capital reserve.
- Forfeited on reissued shares = 350 × 8 = ₹2,800
- Discount = 350 × 7 = ₹2,450
- Capital reserve = ₹350
- Answer: ₹350
Common mistakes and misconceptions
- Transferring the whole forfeiture balance when only some shares are reissued
- Treating forfeiture as income
Practice questions
- (Basic) 200 shares of ₹10 on which ₹5 per share was paid are forfeited. Find the share forfeiture amount.
- (Basic) 900 shares of ₹10 on which ₹7 per share was paid are forfeited. Find the share forfeiture amount.
- (Standard) 200 forfeited shares (₹3 paid each) — 200 of them are reissued at ₹8 per share fully paid. Find the amount transferred to capital reserve.
- (Standard) 400 forfeited shares (₹8 paid each) — 400 of them are reissued at ₹9 per share fully paid. Find the amount transferred to capital reserve.
- (Challenge) 800 forfeited shares (₹5 paid each) — 400 of them are reissued at ₹6 per share fully paid. Find the amount transferred to capital reserve.
- (Challenge) 1000 forfeited shares (₹5 paid each) — 500 of them are reissued at ₹8 per share fully paid. Find the amount transferred to capital reserve.
Answer key with full working
- Q1: 200 × ₹5 → = ₹1,000 → Answer: ₹1,000
- Q2: 900 × ₹7 → = ₹6,300 → Answer: ₹6,300
- Q3: Forfeited on reissued shares = 200 × 3 = ₹600 → Discount = 200 × 2 = ₹400 → Capital reserve = ₹200 → Answer: ₹200
- Q4: Forfeited on reissued shares = 400 × 8 = ₹3,200 → Discount = 400 × 1 = ₹400 → Capital reserve = ₹2,800 → Answer: ₹2,800
- Q5: Forfeited on reissued shares = 400 × 5 = ₹2,000 → Discount = 400 × 4 = ₹1,600 → Capital reserve = ₹400 → Answer: ₹400
- Q6: Forfeited on reissued shares = 500 × 5 = ₹2,500 → Discount = 500 × 2 = ₹1,000 → Capital reserve = ₹1,500 → Answer: ₹1,500
Syllabus note
This skill is listed under "Accounting for Share Capital" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.
Related practice and notes
Frequently asked questions
Which chapter is forfeiture and reissue of shares in?
"Accounting for Share Capital", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.
How were the answers checked?
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.