Share Capital A/c
Profit and Loss A/c
Capital Redemption Reserve A/c
Forfeited Shares A/c
Answer is Wrong!
Answer is Right!
The correct answer is: D. Forfeited Shares A/c
A forfeited share is a share that has been forfeited by the shareholder for non-payment of the call money. The forfeited shares are then reissued at a discount. The discount allowed on reissue of forfeited shares is debited to the Forfeited Shares A/c.
The other options are incorrect for the following reasons:
- Option A: Share Capital A/c is debited when shares are issued. Forfeited shares are shares that have been forfeited, so they are not issued.
- Option B: Profit and Loss A/c is debited when there is a loss on the reissue of forfeited shares. If there is no loss, then Profit and Loss A/c is not debited.
- Option C: Capital Redemption Reserve A/c is a reserve that is created when shares are redeemed. Forfeited shares are not redeemed, so Capital Redemption Reserve A/c is not affected.