Arrange the following steps in order of occurrence in share capital a…

Arrange the following steps in order of occurrence in share capital accounting treatment

A. Allotment of shares

B. Forfeiture of shares

C. Share forfeited amount transferred to capital reserve

D. Minimum subscription received

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → D, A, B, C

The steps follow the life of a share issue, and each one can happen only after the one before it.

(D) Minimum subscription received — until the company has received the minimum subscription, no shares can be allotted.
(A) Allotment of shares — allotment makes the shareholder liable for the allotment money and the calls.
(B) Forfeiture of shares — a share is forfeited when allotment or call money on an allotted share is not paid.
(C) Share forfeited amount transferred to capital reserve — the gain left in the Share Forfeiture Account is a capital profit and goes to Capital Reserve only after the forfeited shares are reissued.

NCERT (2026-27 edition):
Issue of Shares – “… The company has to get minimum subscription within 120 days from the date of the issue of the prospectus. If the company fails to receive the same within the said period, the company cannot proceed for the allotment of shares and application money should be returned within 130 days of the date of issue of prospectus. Allotment of Shares: If minimum subscription has been received, the company may proceed for the allotment of shares after fulfilling certain other legal formalities.”

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 balance, if any, left in the Share-Forfeited Account relating to reissued Shares, should be treated as capital profit and transferred to Capital Reserve Account.”