Question

On Reissue of 500 forfeited shares as fully paid at Rs. 8 per share, what amount will be debited to Shares Forfeiture Account?

• A. Rs. 1,000
• B. Rs. 2,000
• C. Rs. 3,000
• D. Rs. 4,000

Hint:

When shares are reissued at a discount, the difference (discount) is adjusted from the balance lying in the Share Forfeiture Account.

Answer 1

The Correct Option is B

Step 1: Nominal Value of Shares.
500 shares at Rs. 10 each equals Rs. 5,000.

Step 2: Reissue Price.
Shares reissued at Rs. 8 per share total Rs. 4,000.

Step 3: Discount on Reissue.
Discount = Rs. 5,000 (nominal value) – Rs. 4,000 (reissue price) = Rs. 1,000.

Step 4: Adjustment from Share Forfeiture Account.
The maximum allowable discount on reissue is transferable from the Share Forfeiture Account. Consequently, Rs. 1,000 shall be debited to the Share Forfeiture Account.

Final Answer: \[\boxed{\text{Rs. 1,000 will be debited to Shares Forfeiture A/c.}}\]