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Question

What amount should be entered in capital reserve account when share forfeited in forfeited entry is equal to share forfeited in reissue entry?

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Solution

Dear Student,
Navriti is right!! Nothing will be transferred to Capital Reserve Account in case amount in Share Forfeiture Account at the time of forfeiting the share is equal to amount in Share Forfeiture Account at the time of reissue of forfeited shares. This is because, the amount that is credited to Share Forfeiture Account at the time of forfeiture of shares is nullified by a corresponding debit with the same amount to the Share Forfeiture Account at the time of reissue, leaving nothing for transfer to Capital Reserve Account.

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