Accountancy Part AAccounting for Shares

A Ltd. forfeited 4,000 shares of ₹20 each, fully called up on which a…

A Ltd. forfeited 4,000 shares of ₹20 each, fully called up on which application money of ₹6 has been paid. Out of these 2,000 shares were reissued and ₹8,000 has been transferred to capital reserve. Calculate the rate at which the forfeited shares are reissued.

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → ₹18 per share

On reissue, the discount allowed is debited to Share Forfeiture Account and the balance left on the reissued shares goes to Capital Reserve.

Amount forfeited on 2,000 reissued shares = 2,000 × ₹6 = ₹12,000

Transferred to Capital Reserve = ₹8,000

Discount on reissue = ₹12,000 − ₹8,000 = ₹4,000

Discount per share = ₹4,000 ÷ 2,000 = ₹2

Reissue price = ₹20 − ₹2 = ₹18 per share

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “… In this context, it may be noted that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares at the time of initial issue, and that the discount allowed on reissue of forfeited shares should be debited to the ‘Forfeited Share Account’. The balance, if any, left in the Share-Forfeited Account relating to reissued Shares, should be treated as capital profit and transferred to Capital Reserve Account.”

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → ₹18 per share

On reissue, the discount allowed is debited to Share Forfeiture Account and the balance left on the reissued shares goes to Capital Reserve.