Question

Z Ltd. forfeited 300 shares of ₹10 each issued at 20% premium (₹9 called up) on which ₹4 of allotment (including premium) and first call of ₹2 has not been received. Out of these, 100 shares were re-issued as fully paid up for ₹9 per share. What is to amount to be transferred to capital Reserve?

Options

• ₹400

• ₹300

• ₹500

• ₹600

Answer 1

₹400

Explanation:

Premium = 20% ⇒ ₹2

Unpaid: Allotment ₹4 (incl. prem ₹2 ⇒ capital unpaid ₹2) + First call ₹2 ⇒ total capital unpaid ₹4.

Capital called up = ₹9 ⇒ capital received per share = 9 − 4 = ₹5 ⇒ Share Forfeiture (per share) = ₹5.

Reissue: 100 shares @ ₹9 fully paid ⇒ discount ₹1 per share ⇒ total ₹100

Transfer to Capital Reserve = forfeiture on reissued shares − discount = (100 × 5) − 100 = ₹400.