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: Face value of shares.
500 shares of Rs. 10 each = Rs. 5,000.

Step 2: Reissue price.
Shares reissued at Rs. 8 per share = Rs. 4,000.

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

Step 4: Adjustment from Share Forfeiture A/c.
The maximum discount on reissue can be adjusted from Share Forfeiture Account. Therefore, Rs. 1,000 will be debited to Share Forfeiture A/c.

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