Accounting for Share Capital Solutions: Class 12 PDF [CBSE]

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BookTS Grewal Accountancy
Chapter8 – Accounting for Share Capital

TS Grewal Class 12 Solutions Chapter 8

TS Grewal Class 12 Solutions Chapter 8
TS Grewal Class 12 Solutions Chapter 8
TS Grewal Class 12 Solutions Chapter 8
TS Grewal Class 12 Solutions Chapter 8

TS Grewal Class 12 Chapter 8 – Accounting for Share Capital

Hey, dear students! Understanding the nuances of share capital is pivotal not just for your exams but also as a foundational concept in the world of business. Let’s unravel TS Grewal Class 12 Chapter 8 together.

Introduction to Share Capital

Share capital represents the funds raised by a company through the issue of shares. It forms the backbone of a company’s financial structure. Types of Share Capital:

  • Equity Shares: These are ordinary shares that don’t have any special rights or privileges. They bear the ultimate risk of loss and enjoy the benefits of profit. Holders of equity shares are members of the company and have voting rights.
  • Preference Shares: These shares carry a preference right in terms of dividend payment and repayment of capital. They receive dividends before equity shareholders and have a fixed rate of dividend. However, they might not have voting rights unless specified.

Features of a Share

  • Indivisibility: A share is the smallest unit of the company’s capital and cannot be divided.
  • Transferability: Shares of a public company are freely transferable. However, the transfer procedure should adhere to the company’s Articles of Association.
  • Evidence of Ownership: Shareholders are given a share certificate, which serves as proof of ownership. It specifies the number and types of shares held.

Public Subscription of Shares

When a company seeks to raise capital from the public, it invites them to buy its shares via a prospectus. This document contains crucial details about the company, its management, projects in hand, future prospects, and more. Post this, shares are listed on a stock exchange, making them publicly tradable.

Issue of Shares

Shares can be issued in three different ways:

  • At Par: When shares are sold at their face value, i.e., the price printed on the share certificate.
  • At Premium: If the demand for a company’s shares is high, they can be issued at a price greater than the face value. The excess over face value is termed as “premium.”
  • At Discount: In some rare cases, to attract investors, shares might be issued at a price less than their face value. This difference is termed as “discount.” However, issuing shares at a discount is heavily regulated and requires adherence to the provisions of the Companies Act.

Over-Subscription and Under-Subscription of Shares

  • Over-Subscription: At times, the demand for shares might exceed the number of shares a company plans to issue. This scenario is over-subscription. Companies handle this by refunding excess application money or adjusting against future calls.
  • Under-Subscription: When applications received are less than the shares intended to be issued, it’s called under-subscription. The company might reissue or cancel the remaining shares.

Calls on Shares

Rather than asking for the entire amount upfront, a company can ask for a portion of the share money initially and the remaining in stages. These stages are known as “calls.” Each call is an installment. For instance, on a Rs. 10 share, a company might ask for Rs. 4 initially, Rs. 3 as a first call, and Rs. 3 as a final call.

Forfeiture of Shares

If a shareholder defaults on payment of any call, after providing due notice, the company has the right to forfeit their shares. Post forfeiture, these shares become the property of the company and can be reissued.

Reissue of Forfeited Shares

Once shares are forfeited, they don’t just vanish into thin air. The company has the discretion to reissue these shares to potential investors. Here’s what you need to know about it:

  • Reissue Price: The company can reissue the forfeited shares either at par, at a premium, or even at a discount (though the latter is bound by regulations).
  • Adjustment of Past Amounts: Money already received from the original shareholder from whom the shares were forfeited can be adjusted against the proceeds of the reissue.
  • Recording in the Books: The company needs to make the appropriate accounting entries to reflect the reissue of forfeited shares, ensuring that all amounts are correctly adjusted.

Allotment of Shares

The allotment is a critical stage. Once applications are received and the company decides how many shares to issue to each applicant, the process of allotment begins.

  • Practical Scenario: Let’s say a company issues 10,000 shares, but receives applications for 15,000. It might allot shares on a pro-rata basis or might allot a fixed number to each applicant, depending on its strategy.
  • Refund of Excess Application Money: Post allotment, any excess application money is either refunded to the applicants or adjusted against future calls.
  • Entries: The allotment process also involves specific accounting entries that record the allotment and any refunds or adjustments made.

Accounting for Share Capital Class 12 TS Grewal Solutions PDF Download

TS Grewal’s Accountancy book is a popular textbook used by students in Class 12th studying Commerce stream. It is known for its clear and concise explanations of accounting principles and practices. As previously mentioned, using TS Grewal Class 12 Solutions can make your studies more effective and productive. In order to make your studies more convenient and productive for you, we have presented you with Accounting for Share Capital Class 12 TS Grewal Solutions PDF for free.

If you want to download the pdf solution, then you can click on the download button given below. The download button will take you to a new page, where you can easily download your TS Grewal Class 12 Solutions PDF for absolutely free of cost.


In conclusion, this was your TS Grewal Class 12 Solutions Chapter 8: Accounting for Share Capital. Understanding share capital is crucial, not just from an examination perspective but also for those looking to step into the business or financial world. With the right foundation in these concepts, you’re setting yourself up for success in both professional examinations and real-world applications. If you have found our solutions helpful, then make sure share with your friends.


Why might companies prefer issuing shares at a premium?

Issuing shares at a premium allows companies to raise more capital than the face value of the shares, reflecting the company’s good reputation or high demand for its shares.

Can a company make a final call before making the first call?

No, the calls must follow the sequence. After the initial payment, the first call is made, followed by the second, and so on until the final call.

What happens if a company doesn’t issue a share certificate?

If a company fails to issue a share certificate within the stipulated time, it might face legal repercussions, including penalties.

Is the dividend rate always fixed for preference shares?

Yes, preference shares have a fixed rate of dividend. This rate is mentioned at the time of issue and does not change.

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