Question

Royal Ltd. invited applications for issuing 2,00,000 equity shares of ₹10 each at a premium of 25% payable with application. Applications for 4,50,000 shares were received. Applications for 1,00,000 shares were rejected and money refunded. Pro-rata allotment was made to the remianing applicants. The amount per share was payable as follows: On Application ₹4 per share including premium On Allotment ₹3.50 per share  Raghu, who had applied for 7,000 shares failed to pay allotment money. His shares were forfeited immediately after allotment. Afterwards the first and final call was made. Nandan, who had applied for 10,500 shares, failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares, 7,000 shares were reissued as fully paid up for ₹9 per share including whole of Nandan's shares.

Based on the above information, you are required to answer the following question:

Amount credited to Capital Reserve Account will be ______.

Options

• ₹26,000

• ₹27,500

• ₹34,500

• ₹41,000

Answer 1

Amount credited to Capital Reserve Account will be ₹27,500.

Explanation:

Shares allotted to Nandan `10,500 xx (2,00,000)/(3,50,000) = 6,000`

Forfeited shares include 1,000 shares of Raghu and 6,000 shares of Nandan

Forfeited amount on Raghu's 4,000 shares = 18,000

Forfeited amount on his 1,000 shares = `(18,000)/(4,000) xx 1,000`	4,500
Forfeited amount on Nandan's 6,000 shares	30,000
	34,500
Less: Loss on Reissue	7,000
Transferred to Capital Reserve	27,500