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Question
The balance of share forfeited account after the reissue of forfeited shares is transferred to ________________.
The balance of share forfeited account after the reissue of forfeited shares is transferred to ________________.
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Solution
The correct option is C Capital Reserve
Normally, the forfeited shares are reissued as fully paid and at a discount. The amount of discount allowed cannot exceed the amount that had been received on forfeited shares on their original issue, and should be debited to the 'Share Forfeited A/c'. The balance, if any, left in Share Forfeited A/c, in respect of shares reissued , should be treated as capital profit and transferred to Capital Reserve A/c.
Normally, the forfeited shares are reissued as fully paid and at a discount. The amount of discount allowed cannot exceed the amount that had been received on forfeited shares on their original issue, and should be debited to the 'Share Forfeited A/c'. The balance, if any, left in Share Forfeited A/c, in respect of shares reissued , should be treated as capital profit and transferred to Capital Reserve A/c.
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