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

Share Capital A/c

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Capital Reserve A/c

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Share Forfeiture A/c

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Security Premium A/c

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Solution

The correct option is D Security Premium A/c
The premium amount as we discussed is credited to the Securities Premium Account.The accounting treatment for shares issued at a premium will differ slightly than the application money we do not credit it directly to the Securities Premium A/c. Issue of Shares – Equity and Preference Shares · Forfeiture of Shares .

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\begin{matrix} Date & Particulars & L.F. & Debit (₹) & Credit (₹) Share Capital A/c Dr. & (i) - - - Securities Premium A/c Dr. & 4,000 To Share Forfeiture A/c & 8,000 To Calls in Arrears A/c & 14,000 ( _____ shares forfeited for non-payment of ₹ _(ii)___ including premium of ₹2 per share) - ----------------------------------------------------------------------------------------------------------------- - Bank A/c Dr. & (iii) - -- - Shares Forfeiture A/c Dr. & (iv) - -- - To Share Capital A/c & (v) - -- - ( _______ shares reissued at ₹9 per share, fully paid at ₹10 per share) - ------------------------------------------------------------------------------------------ - Share Forfeiture A/c Dr. & 1,400 To Capital Reserve A/c & 1,400 (Net gain on reissued shares transferred to capital reserve) \end{matrix}

Whenever securities premium is received and the shares are forfeited, what will be the treatment in Share Forfeiture A/c?

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