Arrange the following events in proper order. (A) Transfer to capital…

Arrange the following events in proper order.

(A) Transfer to capital reserve

(B) Forfeiture of share

(D) Reissue of share

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

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

The events follow the life of a share on which a shareholder defaults.

(C) Calls in arrears. — First the shareholder fails to pay the allotment or call money, which becomes calls in arrears.

(B) Forfeiture of share. — Because of the non-payment, the directors forfeit the shares, and the amount already received is kept by the company.

(D) Re issue of share. — The forfeited shares are then reissued, at par, premium or a discount not exceeding the amount forfeited.

(A) Transfer to capital reserve. — After the reissue, the gain left in the share forfeiture account on those shares is transferred to Capital Reserve.

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.”

NCERT (2026-27 edition):
Reissue of Shares – “… Once all the forfeited shares have been reissued, any credit balance on Share forfeiture account is transferred to Capital Reserve representing profit on forfeiture of shares.”