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Forfeiture of Shares-Issued at Premium

If forfeited ...

Question

If forfeited shares (which were originally issued at a discount) are reissued at a premium, the amount of such premium will be credited to ________________.

A

Share forfeiture account

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B

Security premium account

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C

Capital reserve account

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D

Discount on issue of shares account

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Solution

The correct option is B Security premium account
When premium has not been received on forfeited shares: In case the shares were issued at premium and the premium money has become due but ... on the shares to be forfeited, the Securities Premium Reserve Account already credited at the time of making call will not be cancelled at the time of forfeiture of shares.

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Q. At the time of forfeiture of shares which were originally issued at a discount, the accounting entry will be
I. A Debit Share capital account with the called-up value of shares forfeited.
II. A Credit Share forfeiture account with the amount received on forfeited shares.
III. A Credit Discount on issue of shares with the amount of discount allowed on forfeited shares,
IV. A Credit Calls-in-arrears with the amount due but not paid on forfeited shares.

Q. If forfeited shares are re-issued at a premium, the amount of such premium should be credited to_____.

Q. If the forfeited shares are issued at a premium, the amount of the premium shall be credited to ___________.

Q. If forfeited shares are re-issued at a premium, the amount of such premium should be creted to ______________.

Q. D Ltd. issued 1,00,000 equity shares of Rs 10 each at a premium of Rs. 2 per share. The amount payable was Rs. 2 on application, Rs. 5 on allotment (including premium) & rest on first & final call. Applications were received for 1,20,000 shares. Excess application money was refunded to applications. All monies due were received except the allotment and first & final call monies on 1,000 shares. These shares were forfeited and reissued at Rs 9 per share.
On reissue of forfeited shares, balance of share forfeiture account transferred to capital reserve account will be _____.

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