Question

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

Z Ltd. forfeited 20 shares of 100 each (₹ 60 called-up) issued at par to Shiv on which he paid ₹ 20 per share. Out of these, ₹ 15 shares were reissued to Rajesh as ₹ 60 paid-up for ₹ 45 per share.

Answer 1

Journal Entries
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		675
	Forfeited Shares A/c   ...Dr.		225
	To Share Capital A/c			900
	(15 forfeited shares reissued @ ₹ 45 per share as ₹ 60 paid-up)
2.	Forfeited Shares A/c   ...Dr.		75
	To Capital Reserve A/c			75
	(Gain on reissue transferred to Capital Reserve)

Working Note:

20 shares of ₹ 100 each were ₹ 60 called-up. Shiv had paid ₹ 20 per share.

Therefore, amount forfeited:

20 × ₹ 20 = ₹ 400

Out of 20 shares, 15 shares were reissued.

Forfeited amount relating to 15 shares:

`400 xx 15/20 = 300`

Shares were reissued as ₹ 60 paid-up for ₹ 45.

Discount on reissue:

15 × (₹ 60 − ₹ 45) = 15 × ₹ 15 = ₹ 225​

Gain transferred to Capital Reserve:

₹ 300 − ₹ 225 = ₹ 75​