R.Ltd invited applications for 15,000 shares of ₹10 each at premium of ₹2 per share. The amount was payable as follows:
On Application ₹4
On allotment ₹5
On 1st call ₹2
On final call ₹1
Applications were received for 20,000 shares. The application of 2,000 shares was rejected. Mohan, who applied for 3,000 shares was allotted in full and prorata allotment was made to the remaining applicants. All money was fully received with the exception of the first call and final call on 3,000 shares held by Hari. These shares were forfeited and subsequently re-issued @ ₹8 per share.
On the basis of the above information answer the question.
Gain on reissue of forfeited shares is transferred to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Capital Reserve A/c
When forfeited shares are reissued, the discount allowed is set off against the Share Forfeiture Account. The balance left on the reissued shares is a capital profit, so it is transferred to the Capital Reserve Account, not to revenue reserves or the Statement of Profit and Loss.
NCERT (2026-27 edition): |