Step 1: Understanding the Concept:
When an investor fails to pay their due installment money, the company cancels their ownership through a process called forfeiture. The shares revert to the company's custody, and the corporate share capital is decreased. Later on, the company can sell these confiscated shares to new buyers, an accounting process known as the reissue of forfeited shares. Reissuing shares restores them to circulation, meaning the company must re-establish its equity ownership balance on its books.
Step 2: Detailed Explanation:
Let's analyze the accounting mechanics of the journal entry recorded when forfeited shares are reissued:
1. Receiving the Cash Inflow: The company receives money from the new buyer. Since money enters the bank account, Bank Account is Debited.
2. Handling Reissue at a Discount (if applicable): If the company sells the shares at a discount to entice new buyers, it covers this loss using the profit accumulated from the original owner's forfeited funds. This discount amount is Debited to the Share Forfeiture Account.
3. Restoring the Equity Balance: Most importantly, the shares are now active and back in the hands of a real public investor. The company must record that its total capital pool has increased back to its nominal level. To increase equity on the credit side, the Share Capital Account is Credited.
The complete standard journal entry format for reissue is:
$$ \text{Bank A/c \dots \dots \dots (with cash received) \quad [Debit]} $$
$$ \text{Share Forfeiture A/c \dots \dots (with discount allowed) \quad [Debit]} $$
$$ \quad To Share Capital A/c \dots \dots (with face value) \quad [Credit] $$
Thus, the account that receives the credit entry is the Share Capital Account. This matches option (A).
Step 3: Final Answer:
The account credited at the time of reissue of forfeited shares is the Share Capital Account.