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If forfeited shares (which were originally issued at a discount) are reissued at a premium, the amount of such premium will be credited to ________.
  • a)
    Share forfeiture account
  • b)
    Share premium account
  • c)
    Capital reserve account
  • d)
    Discount on issue of shares account
Correct answer is option 'B'. Can you explain this answer?
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If forfeited shares (which were originally issued at a discount) are r...
Explanation:
When shares are issued at a discount, the difference between the nominal value and the issue price is known as the discount on the issue of shares. If these shares are forfeited, the amount of discount on the issue of shares is debited to the share forfeiture account.

When the forfeited shares are reissued at a premium, the amount of such premium will be credited to the share premium account. The share premium account is a reserve account that represents the excess amount received over the nominal value of shares.

The following journal entry will be passed for the reissue of forfeited shares at a premium:

Bank Account Dr.

Forfeited Share Account Cr.

Share Premium Account Cr.

The amount received on the reissue of forfeited shares is debited to the bank account. The forfeited share account is credited with the nominal value of shares and the share premium account is credited with the premium amount received.

Hence, the correct answer is option B, i.e., share premium account.
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If forfeited shares (which were originally issued at a discount) are r...
The share premium account is an equity account found on a company's balance sheet. The amount in the account represents the additional amount shareholders paid for their issued shares that were in excess of the par value of those shares. If forfeited shares are re-issued at a premium, the amount of such premium should be credited to such account. 
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D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :On application Rs.20On allotment Rs.50 (including premium)On first call Rs.30On second and final call Rs.20Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of Es forfeited shares being reissued.Q.Amount transferred to Share forfeiture account at the time of forfeiting Fs shares = _________.

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :On application Rs.20On allotment Rs.50 (including premium)On first call Rs.30On second and final call Rs.20Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of Es forfeited shares being reissued.Q.Amount transferred to Share forfeiture account at the time of forfeiting Es shares = _________.

D Ltd. issued 2,00,000 shares of Rs.100 each at a premium of Rs.20 per share payable as follows :On application Rs.20On allotment Rs.50 (including premium)On first call Rs.30On second and final call Rs.20Applications were received for 3,00,000 shares and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of Es forfeited shares being reissued.Q.Net balance in Share Forfeiture Account = ________.

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If forfeited shares (which were originally issued at a discount) are reissued at a premium, the amount of such premium will be credited to ________.a)Share forfeiture accountb)Share premium accountc)Capital reserve accountd)Discount on issue of shares accountCorrect answer is option 'B'. Can you explain this answer?
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