The credit amount on share forfeiture account relating to shares yet to be reissued :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Is carried forward and appear in the balance sheet
A capital profit on forfeiture arises only on the shares that are actually reissued. The part of the Share Forfeiture A/c balance that relates to shares not yet reissued stays in the account, is carried forward, and is shown in the balance sheet as an addition to share capital until those shares are reissued.
Why the other options are incorrect
Option (1) Is transferred to capital reserve and appear in the balance sheet — Incorrect. Only the amount relating to the reissued shares goes to Capital Reserve; the rest may still be needed to cover a discount on a later reissue.
Option (2) Is carried forward and will not appear in the balance sheet — Incorrect. A balance that is still in the books must be shown in the balance sheet; it is added to the paid-up share capital.
Option (4) Is transferred to securities premium and appear in the balance sheet — Incorrect. Securities Premium arises when shares are issued above their face value, not from forfeiture.
NCERT (2026-27 edition): |