Arrange the following in correct sequence of Accounting for Share Capital:

(A) Forfeiture of shares for non-payment of call
(B) Money received on allotment
(C) Profit on reissue of forfeited shares accounts transferred to capital reserve
(D) Money received on application

Choose the correct answer from the options given below:

(D), (B), (A), (C)

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

(D) Money received on application- Prospective investors who wish to purchase shares in the company submit applications along with the application money. The application money is deposited into a scheduled bank as specified in the prospectus. The company must receive the minimum subscription amount within 120 days of issuing the prospectus. If the company does not receive the minimum subscription amount within this time period, it cannot proceed with the allotment of shares and must return the application money to investors within 130 days of issuing the prospectus.

(B) Money received on allotment- If the company receives the minimum subscription amount, it may proceed with the allotment of shares after fulfilling certain legal formalities. The company sends letters of allotment to investors who have been allocated shares and letters of regret to investors who have not been allocated shares. Once shares have been allotted, a valid contract is formed between the company and the investors, who are now shareholders of the company.

(A) Forfeiture of shares for non-payment of call- If the calls in arrears are not paid within the stipulated time, the company may decide to forfeit the shares of the defaulting shareholders. The company typically issues a notice to shareholders to inform them about payment otherwise there shares will be forfeited. Forfeiture involves canceling the shares and removing the shareholder's rights.

(C) Profit on reissue of forfeited shares accounts transferred to capital reserve- The directors can either cancel or re-issue the forfeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount. 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’. 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.