Question

Any balance in the share forfeiture account after all the forfeited share are re-issued should be:

• A. added to the paid-up capital
• B. transferred to Goodwill account
• C. transferred to Capital Reserve account
• D. Should be shown in the balance sheet under the heading of 'Share forfeiture account'

Answer 1

Answer: (C)

transferred to Capital Reserve account

If the discount allowed on reissue of shares is less than the forfeited amount, there will be some balance left in the Forfeited Account, which should be transferred to capital reserve, because it is a profit of capital nature.