Business Studies

The forfeited shares may be re-issued:-
(I) At par only
(II) At  par or premium only
(III) At par or at discount only
(IV) At or par at premium or at discount 
The correct answer is :


ANSWER

(IV)


SOLUTION
Reissue of Forfeited Shares:-
Reissue of forfeited shares is not the allotment of shares, but it is only a re-sale. A company can reissue forfeited shares in accordance with the provisions contained in the articles. The forfeited shares can be reissued at a discount, but the maximum discount should not exceed the amount available in the share forfeiture account.
If the shares re issued at discount
When shares are reissued at a loss, then such a loss should be debited to the share forfeiture account. If the loss on reissue is less than the amount forfeited, then the excess should be transferred to the capital reserve account.
If the shares re issued at premium
If the shares are reissued at a price more than face value, then the excess should be credited to the securities premium account.
When only a portion of shares is reissued, only the profit made on the reissue of such shares must be transferred to the capital reserve account.
If the shares are re issued at par
When the shares re issued at the same value as the face value then they are issued at  par.
View Answers

You're just one step away

Create your Digital Resume For FREE on your name's sub domain "yourname.wcard.io". Register Here!


Single Correct Medium Published on 18th 08, 2020
Next Question
Questions 244531
Subjects 8
Chapters 125
Enrolled Students 197
Enroll Now For FREE

Realted Questions

Q1 Single Correct Medium
Which of the following is not a merit of retained earnings?
  • A. As the funds are generated internally, there is a greater degree of operational freedom and flexibility.
  • B. Retained earnings is a permanent source of funds available to an organisation.
  • C. It is an uncertain source of funds as the profits of business are fluctuating.
  • D. It enhances the capacity of the business to absorb unexpected losses.

Asked in: Business Studies - Sources of Business Finance


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q2 Single Correct Medium
The sources of funds can be categorized on the basis of _______________.
  • A. Time period
  • B. Ownership
  • C. Source of generation
  • D. All of the above

Asked in: Business Studies - Sources of Business Finance


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q3 TRUE/FALSE Medium
State, with reasons, whether the following statements are True or False :
Bondholders are not owners of the company
  • A. True
  • B. False

Asked in: Business Studies - Sources of Business Finance


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q4 Single Correct Medium
________ shares is the most important source of raising long term capital by a company.
  • A. Preference
  • B. Bonus
  • C. Right
  • D. Equity

Asked in: Business Studies - Sources of Business Finance


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q5 Single Correct Medium
Which one is more appropriate for cost of retained earnings?
  • A. Weighted Average Cost of Capital
  • B. Opportunity cost to the firm
  • C. Expected rate of return by the investor
  • D. None of the above

Asked in: Business Studies - Sources of Business Finance


1 Verified Answer | Published on 18th 08, 2020

View Answer