Question

What is the amount of Profit on reissue of Forfeited Shares Accounts transferred to Capital Reserve?

• A. Rs. 500
• B. Rs. 1,000
• C. Rs. 2,000
• D. Rs. 2,500

Hint:

On reissue of forfeited shares, any balance left in Share Forfeiture A/c (after adjusting discount) is considered a capital profit and transferred to Capital Reserve.

Answer 1

The Correct Option is C

Step 1: Initial Forfeiture Credit.
Application money received for 500 shares at Rs. 5 per share totaled Rs. 2,500. This amount was credited to the Share Forfeiture A/c.

Step 2: Reissue Discount.
A discount of Rs. 1,000 was allowed on the reissue of shares.

Step 3: Forfeiture Account Balance.
Balance remaining in the Forfeiture A/c = Rs. 2,500 – Rs. 1,000 = Rs. 1,500.

Step 4: Profit Transfer.
The remaining balance of Rs. 1,500 represents the profit from the reissue of forfeited shares and is transferred to the Capital Reserve.

Final Answer: \[\boxed{\text{Rs. 1,500 transferred to Capital Reserve}}\]