Accountancy Part AAccounting for Shares

Discount allowed on re-issue of forfeited shares, will be:-

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Debited to the 'Share Forfeiture Account'

The balance of Share Forfeiture Account is the money already received on the forfeited shares. When these shares are reissued at a discount, the discount is met out of that balance, so it is debited to Share Forfeiture Account. Any balance left on the reissued shares goes to Capital Reserve.

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’.”