Based on following passage answer questions below

A Ltd with an Authorised Capital of 10,00,000 is divided into shares of ₹10 each, issued 50,000 shares at a premium of ₹2 per share payable as follows
on Application ₹3 per share
on Allotment ₹5 per share (including premium)
on First and Final call Balance amount

Application were received for 60,000 shares and the directors allotted shares to all on proportionate basis. All money received except first and final call from Hari who had applied for 1200 shares. His shares were forfeited and later half of his forfeited shares were reissued at 8 per share as fully paid up.

Identify the account to which the discount allowed on the reissue of forfeited shares should be debited.

Forfeited shares account

The correct answer is option 2- Forfeited shares account.

The discount allowed on the reissue of forfeited shares should be debited to the Forfeited Shares Account.

The discount allowed on the reissue of forfeited shares is a reduction in the amount of money that the company receives from the reissue of the shares. This reduction in revenue is recorded in the Forfeited Shares Account.