Question

What amount of gain on reissue will be transferred to Capital Reserve under following situation?

3,000 shares of ₹ 10 each of Rakesh were forfeited by crediting ₹ 5,000 to Forfeited Shares Account. Out of these, 1,800 shares were reissued to Mohan for ₹ 9 per share as fully paid-up.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		16,200
	Forfeited Shares A/c   ...Dr.		1,800
	To Share Capital A/c			18,000
	(1,800 forfeited shares reissued @ ₹ 9 per share as fully paid-up)
2.	Forfeited Shares A/c Dr.		1,200
	To Capital Reserve A/c			1,200
	(Gain on reissue transferred to Capital Reserve)

Working Note:

3,000 shares were forfeited and Forfeited Shares A/c was credited with ₹ 5,000.

Out of these, 1,800 shares were reissued.

Forfeited amount relating to 1,800 shares:

`₹ 5,000 × (1,800)/(3,000) = ₹ 3,000`

Discount on reissue:

1,800 × (₹ 10 − ₹ 9) = ₹ 1,800

Gain transferred to Capital Reserve:

₹ 3,000 − ₹ 1,800 = ₹ 1,200