Practicing Success
What is the maximum amount of discount which may be allowed on the reissue of forfeited shares by the company? |
The amount credited in Forfeiture share account Amount debited to Forfeiture share account Depend on company Depend on public demand of shares |
The amount credited in Forfeiture share account |
The correct answer is option 1- The amount credited in Forfeiture share account. When shares are forfeited (i.e., the original shareholder fails to pay the required amount), the company usually debits the shareholder's account and credits the Forfeiture Share Account with the amount already paid by the shareholder. If the company later decides to reissue these forfeited shares, it can do so at a discount, but this discount cannot exceed the amount credited in the Forfeiture Share Account. |