Question

The balance of the forfeited shares account after reissue of forfeited shares is transferred to _______________.

• A. Capital reserve A/c
• B. Share capital A/c
• C. Profit and loss A/c
• D. General reserve A/c

Answer 1

The correct option is A Capital reserve A/c

When forfeited shares are reissued the maximum discount that can be given on the reissue is the amount of credit in the forfeiture account.

If the discount is less than the amount in the credit of forfeiture account then, the amount in forfeiture a/c is to be transferred to capital reserve account as the profit, is in the nature of capital profit.