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: Forfeiture amount earlier credited.
Application money received on 500 shares = Rs. 5 per share = Rs. 2,500. Thus, Share Forfeiture A/c had Rs. 2,500.

Step 2: Discount allowed on reissue.
Discount on reissue = Rs. 1,000 (already adjusted).

Step 3: Remaining balance in Forfeiture A/c.
Remaining = Rs. 2,500 – Rs. 1,000 = Rs. 1,500.

Step 4: Profit transfer.
This balance is profit on reissue of forfeited shares and is transferred to Capital Reserve. Therefore, amount transferred = Rs. 1,500.

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