When shares are forfeited all entries relating to the forfeited shares, except those relating to premium, already recorded in the accounting records, must be ______.

Same

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Reversed

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Different

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All of the above

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Solution

The correct option is A Reversed
Some shareholders fail to pay one or more installments, i.e, allotment money and/or call money. In such case, the company can forfeit their shares, i.e. cancel their allotment already received thereon as forfeited to the company within the framework of the provisions in its articles. When shares are forfeited all entries relating to the forfeited shares, except those relating to premium, already recorded in the accounting records, must be reversed.

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Pass necessary Journal entries to record the above.

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

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