The Profit on reissue of forfeited shares is transferred to:

The correct answer is Option (3) → Capital Reserve

When forfeited shares are reissued, the company may gain a profit if the amount received from the reissue plus the amount already received on forfeiture exceeds the face value of the shares.

• This profit is not a revenue profit (since it doesn’t arise from normal business operations).

• It is a capital profit, hence it is transferred to the Capital Reserve account.