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If the premium amount has not been received in respect of shares being forfeited, the Securities Premium Reserve Account:

  1. A
    will not be mentioned at the time of forfeiture
  2. B
    will be debited at the time of forfeiture
  3. C
    will be credited at the time of forfeiture
  4. D
    will be considered at the time of reissue of shares

Solution & Step-by-step Explanation

Under Section 52 of the Companies Act, 2013, if the premium on shares has not been collected/realized prior to forfeiture, the initial credit must be reversed. Thus, the Securities Premium Reserve Account is debited during the forfeiture entry to cancel out the uncollected premium.

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Try it yourself before checking the explanation above.

If the premium amount has not been received in respect of shares being forfeited, the Securities Premium Reserve Account:
A
will not be mentioned at the time of forfeiture
B
will be debited at the time of forfeiture
C
will be credited at the time of forfeiture
D
will be considered at the time of reissue of shares

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