Question

Y Ltd. forfeited 400 shares of ₹10 each, ₹7 called up, for non-payment of first call of ₹2 per share. Out of these, 300 shares were reissued for ₹6 per share as ₹7 paid up. What is the amount to be transferred to Capital Reserve Account?

Options

• ₹1,700

• ₹1,200

• ₹2,100

• ₹300

Answer 1

₹1,200

Explanation:

Forfeiture (400 shares, ₹7 called):

Share Forfeiture = (₹7 − ₹2 unpaid) = ₹5 per share = 400 × 5 = ₹2,000.

Reissue: 300 shares at ₹6 as ₹7 paid = discount ₹1 per share → 300 × 1 = ₹300

Forfeiture related to reissued shares = 300 × ₹5 = ₹1,500.

Transfer to Capital Reserve

= 1,500 − 300

= ₹1,200