Profit on reissue of forfeited shares should be treated as:

When shares are forfeited due to non-payment of calls and subsequently reissued, any profit earned on such reissue is treated as Capital Profit.

This is because the transaction relates to the company's capital structure (share capital) and not to its regular business operations. The profit arises from a capital transaction, specifically the reissuance of previously forfeited shares.

Treatment in Books:

The profit on reissue of forfeited shares is calculated as:

$\text{Profit on Reissue} = \text{Amount forfeited} - \text{Discount allowed on reissue}$

This profit is transferred to Capital Reserve, which is a non-distributable reserve. It cannot be used for dividend distribution to shareholders.

Why not other options?

• Revenue Profit/Operating Profit: These arise from normal business activities like sale of goods/services. Reissue of shares is not a business operation.
• Income: This is too broad a term. While technically it is income, the specific classification for accounting purposes is Capital Profit, which gets credited to Capital Reserve.

The correct answer is Option 2: Capital Profit because it stems from a capital transaction and must be segregated from profits available for distribution.