Journal Lab — Forfeiture of Shares — Class 12 Accountancy Notes (GSEB)

What Is Forfeiture?

⭐ Forfeiture (VSQ 3)

If a shareholder fails to pay the amount due on allotment or on any call within the specified period, the company can forfeit (cancel) his shares after completing the due formalities. After forfeiture the shareholder's name is removed from the register of members and the amount already paid is forfeited — it is not returned.

Who allows it

Directors are usually empowered by the Articles of Association; absent rules → Table F of Schedule I, Companies Act 2013 applies.

When it can happen

Any time after allotment, after the first call, or after the final call — the later the forfeiture, the larger the called-up figure that gets debited.

The relatable version

A student pays ₹ 7 of a ₹ 10 canteen coupon and stops paying. The committee cancels the coupon, keeps the ₹ 7, and resells the coupon to someone else — exactly what a company does with a forfeited share. The ₹ 7 is not refunded; it becomes a capital profit.

⭐ The four-line anatomy of every forfeiture entry (MCQ 6)

1

Share capital A/c Dr = shares forfeited × called-up per share (capital portion only) — the cancelled capital. (MCQ 6 → debited to share capital A/c.)

2

Securities premium A/c Dr = shares × premium called up BUT NOT received — only in the premium-unreceived case. (MCQ 9.)

3

To Share forfeiture A/c = shares × amount actually received towards capital — the confiscated money.

4

To Share allotment / Share call / Calls-in-arrears = shares × amount called but not received, stage by stage.

MCQ traps

MCQ 6 = the called-up amount on forfeited shares is debited to share capital A/c (d) — NOT to share forfeiture, which is the credit side for received money.MCQ 9 = premium not received → debited to securities premium A/c (a).

The Cap/Pre Matrix — the Teacher's Tick-Cross Method

Left half: the live tick/cross matrix (rows = stages, columns = Cap and Pre). Right half: the forfeiture entry the ticks and crosses produce. Toggle any cell and watch the entry move.

ForfeitureFlowMap — tick the matrix, read the entry

1

Read the matrix

Called up ₹ 10 = Application ₹ 4 ✔ · Allotment ₹ 3 ✔ · Final call ₹ 3 ✘ → received ₹ 7, unpaid ₹ 3.

2

Share capital A/c Dr

The whole called capital is cancelled, paid or not. 600 × ₹ 10 = ₹ 6,000

3

To Share forfeiture A/c

This is the confiscated money — the only credit that is profit. 600 × ₹ 7 = ₹ 4,200

4

To Share / call A/c

Final call: 600 × ₹ 3 = ₹ 1,800

5

Balance check

Dr ₹ 6,000 = Cr ₹ 6,000 → the entry balances ✓.

Forfeiture journal

Dr = Cr ✓

Equity share capital A/c

600 × ₹ 10 = ₹ 6,000

₹ 6,000

To Share forfeiture A/c

600 × ₹ 7 = ₹ 4,200

₹ 4,200

To Share final call A/c

600 × ₹ 3 = ₹ 1,800

₹ 1,800

Received vs unpaid — the split bar

total called ₹ 6,000

₹ 4,200

₹ 1,800

forfeited money ₹ 4,200 unpaid capital ₹ 1,800 unpaid premium ₹ 0

Fill the matrix first, then write the entry

In an exam sum, first fill the matrix from the wording (“paid ₹ X on application, did not pay ₹ Y on allotment…”), THEN write the entry line by line from the ticks and crosses. The green slice is the confiscated money; the rose and violet slices go straight back to the stage accounts and to Securities premium. Share forfeiture receives only the paid capital.

Matrix rules (per stage)

Cell	Result in the journal
Cap ✔ (capital portion paid)	contributes to To Share Forfeiture A/c (shares × ₹/share paid)
Cap ✘ (capital portion unpaid)	To Share allotment/call A/c (shares × ₹/share unpaid)
Pre ✔ (premium received)	no effect — premium already sits in Securities Premium A/c
Pre ✘ (premium not received)	Securities premium A/c Dr (shares × premium unpaid)

Check row: Share capital Dr = Σ all capital portions called up (✔ + ✘). The entry must balance: Dr = To forfeiture (received capital) + To calls (unpaid capital), with the premium Dr added whenever a Pre ✘ exists.

Case I — premium received

Issued at par, or at premium with the full premium already collected → no Securities premium line at all.

Case II — premium called but NOT received

Securities premium A/c Dr (shares × premium unpaid) — the exact situation behind MCQ 9.

Two textbook cases, one click

The preset buttons above load Illustration 9 (1)–(4) — flip between Case (3) (premium already received) and Case (4) (premium never received) and watch the violet Securities premium line appear and disappear. That one line is the whole difference.

Taught Walkthrough — Illustration 9 (All Four Cases)

Solved Example

Problem

(1) M Ltd — issued at par, premium not applicable. Forfeited 600 shares of ₹ 10 (Govind), called up ₹ 10; paid ₹ 4 on application + ₹ 3 on allotment; unpaid final call ₹ 3.

Solution

Equity share capital A/c Dr (600 × ₹ 10) 6,000 To Share forfeiture A/c (600 × ₹ 7) 4,200 To Share final call A/c (600 × ₹ 3) 1,800

Solved Example

Problem

(2) N Ltd — forfeit after the first call. 2,400 shares of ₹ 10; called up ₹ 8 till date; paid ₹ 3 + ₹ 3 = ₹ 6; unpaid first call ₹ 2.

Solution

Equity share capital A/c Dr (2400 × ₹ 8) 19,200 To Share forfeiture A/c (2400 × ₹ 6) 14,400 To Share first call A/c (2400 × ₹ 2) 4,800

Solved Example

Problem

(3) Q Ltd — premium already received. Called ₹ 22 (including premium ₹ 12); Kinjal paid ₹ 15 (incl. premium ₹ 12) on application + ₹ 4 on allotment; unpaid final call ₹ 3.

Solution

Equity share capital A/c Dr (500 × ₹ 10) 5,000 To Share forfeiture A/c (500 × ₹ 7) 3,500 To Share final call A/c (500 × ₹ 3) 1,500

Solved Example

Problem

(4) P Ltd — premium NOT received. ₹ 10 face at 50% premium (₹ 5); called ₹ 4 application, ₹ 8 allotment including premium, ₹ 3 first and final call; Jigar (600 shares) paid only the application.

Solution

Equity share capital A/c Dr (600 × ₹ 10) 6,000 Securities premium A/c Dr (600 × ₹ 5) 3,000 To Share forfeiture A/c (600 × ₹ 4) 2,400 To Share allotment A/c (600 × ₹ 8) 4,800 To Share first and final call A/c (600 × ₹ 3) 1,800

The line students forget

An unpaid stage is credited for its full called amount, not just its capital portion — that is what closes the stage account. In Case (4) the allotment credit reads ₹ 4,800 (600 × ₹ 8), while the capital piece of it shows up on the debit side of Share capital and the premium piece in Securities premium.

Interactive Journal Lab — Forfeiture

Fill the Cap/Pre matrix with your own numbers, enter shares and the called-up rates, and the page builds the balanced forfeiture entry — every line as shares × ₹ per share.

Journal Lab: Forfeiture — matrix → balanced entry

Work through the steps in order — the same six lines you will write in the exam.

Worked Board Sums

Type — Forfeiture Journals: Board Sums

9 problems

Par / premium received (no securities premium line)

Illustration 9 cases (1)–(3): M Ltd 600 shares of ₹ 10 called up ₹ 10, paid ₹ 7, unpaid ₹ 3; N Ltd 2,400 shares called up ₹ 8, paid ₹ 6, unpaid ₹ 2; Q Ltd 500 shares called up ₹ 10 capital with premium ₹ 12 already received, paid ₹ 7 capital, unpaid ₹ 3.6,000 / 4,200 / 1,800 · 19,200 / 14,400 / 4,800 · 5,000 / 3,500 / 1,500

All three are presets in the Lab — click them and read the chips.

Dipak Ltd: 5,00,000 × ₹ 10 at premium ₹ 25. Anup (4,000 shares) unpaid allotment (₹ 17 incl. premium ₹ 15) → forfeited after allotment. Purvi (3,000 shares) unpaid first call ₹ 2 → forfeited after first call.Anup: Dr capital 20,000 (4,000×5), Dr premium 60,000 (4,000×15), To forfeiture 12,000 (4,000×3), To allotment 68,000 (4,000×17) · Purvi: Dr capital 21,000, To forfeiture 15,000, To first call 6,000

Two separate forfeitures at different stages — build one matrix each.

Dharam Metals Ltd., Jamnagar: 8,00,000 × ₹ 10 at premium ₹ 30 — ₹ 13 (incl. premium 10) application, ₹ 23 (incl. premium 20) allotment, ₹ 4 final call. Vipul (1,500) unpaid allotment → forfeited after allotment. Hema (500) unpaid final call → forfeited after final call.Vipul: premium on application (₹ 10) WAS received, only allotment premium ₹ 20 is unpaid → Dr Securities premium 1,500 × ₹ 20 = 30,000.

⚠️ Mixed premium treatment — enter per-stage premium in the matrix so only the unpaid stage ticks Pre ✘.

Premium not received (securities premium Dr)

P Ltd: 600 shares of ₹ 10 at 50% premium; Jigar paid only application ₹ 4; unpaid allotment ₹ 8 (incl. premium ₹ 5) and call ₹ 3.Dr capital 6,000, Dr premium 3,000, To forfeiture 2,400, To allotment 4,800, To call 1,800

Lab preset — Case (4).

Dhyani Ceramic Ltd: 3,00,000 × ₹ 10 at premium ₹ 150 — application ₹ 74 (incl. 70), allotment ₹ 44 (incl. 40), final call ₹ 42 (incl. 40). Vishal (2,000) unpaid final call → forfeited.Dr capital 20,000 (2,000×10), Dr premium 80,000 (2,000×40), To forfeiture 16,000 (2,000×8), To final call 84,000 (2,000×42)

Premium ₹ 150 = 70 + 40 + 40 — enter it stage by stage, not as one lump.

Rustom Ltd., Valsad: 2,40,000 × ₹ 10 at premium ₹ 70 — application ₹ 38 (incl. 35), allotment ₹ 28 (incl. 25), final call ₹ 14 (incl. 10). Jahangir (2,000) unpaid allotment and final call → forfeited, then reissued.Build the forfeiture here, then take the same numbers to the Reissue topic.

Multiple defaulters / combined forfeiture

Naznin Textiles: 12,00,000 × ₹ 10 — ₹ 4 application, ₹ 4 allotment, ₹ 2 final call. Applications 15,50,000, excess rejected. Harun (8,000) unpaid allotment and final; Salim (2,000) unpaid final. Both forfeited together after the final call.Dr capital 1,00,000 (10,000×10), To forfeiture 48,000 (8,000×4 + 2,000×8), To calls-in-arrears 52,000 (32,000 + 20,000)

Switch the arrears presentation to Calls-in-arrears for this shape.

A Ltd: 18,00,000 × ₹ 10 — ₹ 3 application, ₹ 2 allotment, ₹ 3 first call, ₹ 2 final call. Ami (1,200) unpaid allotment + first + final; Rami (800) unpaid first + final; Gami (1,600) unpaid final. All 3,600 forfeited together.Dr capital 36,000, To forfeiture 20,400, To allotment 2,400, To first call 6,000, To final call 7,200

For a combined entry, work the received/not-received table first — it IS the matrix in tabular form.

Siddhapur Isabgul Ltd: 6,00,000 × ₹ 10 at premium ₹ 7 — application ₹ 10 (incl. premium), allotment ₹ 4, final call ₹ 3. Applications 9,00,000, excess rejected. Siddharaj (6,000) unpaid allotment → forfeited after allotment; Jaysinh (4,000) unpaid final → forfeited after final call.Two forfeitures at different stages — one matrix each.

Key Takeaways

Forfeiture = cancel the shares and keep what was paid — the name leaves the register and nothing is refunded.
Build the Cap/Pre matrix first: ticks → Share forfeiture, crosses → stage accounts, unpaid premium → Securities premium Dr.
Share capital Dr is always shares × called-up capital — the whole called capital, paid or not (MCQ 6).
Premium already received → no securities premium line; premium unpaid → securities premium Dr (MCQ 9).
The stage of forfeiture matters — called-up capital grows with every stage (₹ 8 after the first call vs ₹ 10 after the final call).
Multiple defaulters can be forfeited in one combined entry — sum the received and unpaid columns first (Illustration 13).