Arrange in correct sequence. (A) Receipt of application money(B) Amou…

Arrange in correct sequence.

(A) Receipt of application money
(B) Amount due on allotment and received
(C) Reissue of shares (already forfeited)
(D) Forfeiture of shares
(E) Allotment of shares and application money transferred to share capital A/c

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A), (E), (B), (D), (C)

(A) Receipt of application money — first: money comes in with the applications.

(E) Allotment of shares and application money transferred to share capital A/c — second: on allotment, application money becomes part of share capital.

(B) Amount due on allotment and received — third: allotment money is called and collected.

(D) Forfeiture of shares — fourth: shares of a defaulter are forfeited only after he fails to pay a call.

(C) Reissue of shares (already forfeited) — fifth: only shares already forfeited can be reissued.

NCERT (2026-27 edition):
On application – “… The amount of money paid with various instalment represents the contribution to share capital and should ultimately be credited to share capital. However, for the sake of convenience, initially individual accounts are opened for each instalment. All money received along with application is deposited with a scheduled bank in a separate account opened for the purpose.”

NCERT (2026-27 edition):
Accounting Treatment

Extract from the NCERT textbook

NCERT (2026-27 edition):
Forfeiture of Shares – “It may happen that some shareholders fail to pay one or more instalments, viz. allotment money and/or call money. In such circumstances, the company can forfeit their shares, i.e. cancel their allotment and treat the amount already received thereon as forfeited to the company within the framework of the provisions in its articles.”

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “The directors can either cancel or re-issue the forefeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount.”