Question

Arrange the following in a sequence related to the issue and redemption of shares
(A) Forfeiture of shares
(B) Reissue of shares
(C) Calls in arrears
(D) Transfer of share forfeited account balance to capital reserve A/c
Choose the correct answer from the options given below:

• A. (A), (B), (C), (D)
• B. (B), (A), (C), (D)
• C. (C), (A), (B), (D)
• D. (D), (B), (C), (A)

Hint:

Unpaid calls come first, then forfeiture, then reissue, and last the transfer of the forfeiture balance to capital reserve.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Shares are issued in calls. If a shareholder does not pay a call, the company can cancel (forfeit) the shares, sell them again (reissue), and finally move any leftover forfeiture profit to capital reserve. This question asks for that order of events.

Step 2: Key Approach:
Put the events in the order in which they naturally happen in time. An event that causes the next one must come first.

Step 3: Detailed Explanation:
First, some shareholders fail to pay the call money on time. This is (C) Calls in arrears.
Second, the company forfeits the shares of the defaulting members. This is (A) Forfeiture of shares.
Third, the company sells the forfeited shares again to new buyers. This is (B) Reissue of shares.
Last, after the reissue, any balance left in the Share Forfeited Account is a capital profit, so it goes to Capital Reserve. This is (D).

Step 4: Check the options:
Option 1 puts forfeiture before calls in arrears, which is impossible, so it is wrong.
Option 2 puts reissue before forfeiture, but only forfeited shares can be reissued, so it is wrong.
Option 4 starts with the transfer to capital reserve, which can only be done at the end, so it is wrong.
Option 3 gives C, A, B, D, which matches the natural order.

Final Answer:
The correct order is (C), (A), (B), (D), which is option 3. \[ \boxed{\text{Option 3}} \]