Accountancy Part AAccounting for Shares

D and M Ltd. forfeited 5,000 shares of ₹10 each for non-payment of fi…

D and M Ltd. forfeited 5,000 shares of ₹10 each for non-payment of final call of ₹3/- per share. Out of these 2,000 shares were reissued @ ₹12/- per share as fully paid up. What is the maximum discount that can be allowed for re-issue of remaining 3,000 shares?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → ₹21,000

Amount received on each forfeited share = ₹10 − ₹3 unpaid final call = ₹7

The discount on reissue cannot exceed the amount received on those shares.

Maximum discount on the remaining 3,000 shares = 3,000 × ₹7 = ₹21,000

The 2,000 shares reissued at ₹12 carry no discount, so they do not use up any of this limit.

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “… Forfeited shares may be reissued as fully paid at a par, premium, discount. In this context, it may be noted that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares at the time of initial issue, and that the discount allowed on reissue of forfeited shares should be debited to the ‘Forfeited Share Account’.”