Question

IN question no. 50 of T.S Grewalbook page no. 7.105 why share forfeited{300 muliplied by 6} is added to subscribed capital.

Answer 1

Hi Gaurav,

At the time of forfeiture, the company cancels the issued shares for non-payment of certain money called. Whatever amount has been received on such shares is a gain (need not to be refunded) for the company, accordingly it is credited to Share Forfeiture A/c.

Now, at the time of partial re-issue of shares, the balance of share forfeiture on re-issued shares is transferred to capital reserve and share forfeiture of unissued shares (forfeited) is added to the subscribed capital. The portion of ​share forfeiture belonging to unissued shares has been received on account of share capital, therefore it is added to subscribed capital.