Subscribed and fully paid capital of Dharma Ltd. will be :

Q: Subscribed and fully paid capital of Dharma Ltd. will be :

**Correct option: (B) Rs. 8,30,000.** - Total shares subscribed = 90,000. Shares forfeited (partly paid, hence excluded from 'fully paid') = Aditi's 4,000 + Rohit's 3,000 = 7,000 shares. - Shares that are fully paid = $90,000 - 7,000 = 83,000$ shares. - Subscribed and fully paid capital = 83,000 × Rs. 10 = **Rs. 8,30,000**.

Accounting for Share Capital

Subscribed and Fully Paid Capital, Share Forfeiture

Options

(A)Rs. 9,00,000

(B)Rs. 8,30,000

(C)Rs. 8,56,000

(D)Nil

Official Answer

Correct option: (B) Rs. 8,30,000.

Total shares subscribed = 90,000. Shares forfeited (partly paid, hence excluded from 'fully paid') = Aditi's 4,000 + Rohit's 3,000 = 7,000 shares.
Shares that are fully paid = $90,000 - 7,000 = 83,000$ shares.
Subscribed and fully paid capital = 83,000 × Rs. 10 = Rs. 8,30,000.

subscribed and fully paid capitalforfeiture of sharesface valuesubscribed capitalcall in arrears

Marking Scheme

11 mark for selecting (B) Rs. 8,30,000 with the correct underlying computation of fully paid shares (83,000).

Hint

Subtract the forfeited shares ( $4,000 + 3,000 = 7,000$ ) from the total subscribed 90,000 before multiplying by the face value.

Quick Oral Answer

83,000 of the 90,000 subscribed shares had their full Rs. 10 received (the other 7,000 were forfeited), so subscribed and fully paid capital = $83,000 \times 10$ = Rs. 8,30,000.

Analysis & Explanation

Under Schedule III, subscribed capital splits into 'Subscribed and fully paid' and 'Subscribed but not fully paid'. After forfeiture, the shares of Aditi and Rohit are no longer part of the subscribed share capital — their partly-received money instead sits in the Share Forfeiture Account.

Why (B) is correct

Only the 83,000 shares on which the full Rs. 10 per share was received remain classified as 'subscribed and fully paid': $83,000 \times 10$ = Rs. 8,30,000.

Why the distractors are wrong

(A) Rs. 9,00,000 treats all 90,000 shares as fully paid, ignoring the 7,000 forfeited shares.
(C) Rs. 8,56,000 does not correspond to any consistent share count at Rs. 10 face value.
(D) Nil would be true only if no shares at all were fully paid, which is incorrect here.

Common Mistakes

1Treating all 90,000 subscribed shares as fully paid without excluding the 7,000 forfeited shares.
2Confusing 'subscribed and fully paid' with the total Share Capital figure shown in the Balance Sheet (which also adds back the Forfeited Shares Account).

Interesting Facts

'Subscribed but not fully paid' is a temporary category — once shares are forfeited (as here) or the call money is finally received, they move out of that category entirely.

Schedule III requires this fully-paid/not-fully-paid split to be disclosed even though both amounts together simply reconcile to total called-up capital.

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Frequently Asked Questions

Why are the forfeited shares excluded from 'subscribed and fully paid'?

Because forfeited shares are no longer 'subscribed' shares outstanding in a shareholder's name — the amount received on them before forfeiture is instead held in the Share Forfeiture Account until the shares are reissued.