The discount allowed on reissue of forfeited shares is debited to

Share Capital A/c
Profit and Loss A/c
Capital Redemption Reserve A/c
Forfeited Shares A/c

The correct answer is: D. Forfeited Shares A/c

A forfeited share is a share that has been forfeited

64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTube
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.
Exit mobile version