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Question

Consider the following journal entry:

In what circumstances, such journal entry is passed?

A Forfeiture of shares which were issued at premium Correct Answer Incorrect Answer
B Forfeiture of shares which were issued at par Correct Answer Incorrect Answer
C Forfeiture of shares which were issued at discount Correct Answer Incorrect Answer
D Reissue of forfeited shares Correct Answer Incorrect Answer

Solution

Amount of discount which was earlier booked as expense is now reversed: Share Capital A/c Dr (amount called up) To share allotment A/c (allotment unpaid) To share call A/c (call unpaid) To forfeited shares A/c (total amount paid) To discount on issue of shares A/C (amount of discount)

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