The correct answer is Option (3) → Rs. 30
On forfeiture, Share Forfeiture Account is credited only with the amount received towards share capital; the premium already received stays in Securities Premium. On reissue, the discount allowed is met from the forfeited amount, and the balance is transferred to Capital Reserve.
Amount received = Rs. 70, of which premium = Rs. 10
Forfeited amount (towards capital) = Rs. 70 − Rs. 10 = Rs. 60
Discount on reissue = Rs. 100 − Rs. 70 = Rs. 30
Transferred to Capital Reserve = Rs. 60 − Rs. 30 = Rs. 30
NCERT (2026-27 edition):
Forfeiture of Shares issued at a Premium – “If shares were initially issued at a premium and the premium amount has been fully realised, but some of the shares are forfeited due to non-payment of call money, the accounting treatment for forfeiture shall be on the same pattern as in the case of shares issued at par. The important point to be noted in this context is that the securities premium account is not to be debited at the time of forfeiture if the premium has been received in respect of the forefeited shares and the amount of forfeiture shall be excluding premium amount.” NCERT (2026-27 edition):
Reissue of Forfeited Shares – “The directors can either cancel or re-issue the forefeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount. Forfeited shares may be reissued as fully paid at a par, premium, discount. 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.” |
