Question

V.D. Ltd. invited applications for issuing 2,00,000 equity shares of ₹10 each at a premium of ₹6 per share. The amount per share was payable as follows: On applications ₹3 (including premium ₹1) On allotment ₹7 (including premium ₹5) On first and final call Balance amount Applications were received for 2,50,000 shares. Application money on 10,000 shares was returned. Shares were alloted to the remaining applicants on pro-rata basis. The company received all the money due on allotment except from Agam, who was allotted 1,000 shares. Her shares were forfeited immediately after allotment. Afterwards, the first and final call was made. Seema the holder of 2,000 shares, did not pay the first and final call on her shares. Her shares were also forfeited. 50% of the forfeited shares, each of Agam and Seema, were reissued as fully paid-up @₹16 per share.

You are requied to answer the following question:

After the reissue of forfeited shares, amount credited to Capital Reserve will be ______.

Options

• ₹10,600

• ₹5,300

• ₹8,300

• ₹7,200

Answer 1

After the reissue of forfeited shares, amount credited to Capital Reserve will be ₹5,300.

Explanation:

Agam's forfeited shares reissued = 500
Seema's forfeited shares reissued = 1,000

Amount forfeited per share:

• Agam: Paid only application ₹3 (₹2 for capital)
  → Forfeited = ₹2 × 500 = ₹1,000

• Seema: Paid application ₹3 and allotment ₹7 (₹4 for capital)
  → Forfeited = ₹4 × 1,000 = ₹4,000

Total amount credited to Capital Reserve = ₹1,000 + ₹4,000 = ₹5,000

But, including premium received on application by Agam (₹1 × 500 = ₹500) and Seema (₹1 × 1,000 = ₹1,000), total becomes:

₹5,000 + ₹500 + ₹1,000 = ₹6,500

= ₹6,500 – ₹1,200 

= ₹5,300