Question

400 shares of ₹50 each issued at par were forfeited for non-payment of final call of ₹10 per share. These shares were reissued at ₹45 per share as fully paid-up. The amount transferred to capital reserve is

• A. ₹15,000
• B. ₹14,000
• C. ₹16,000
• D. ₹13,000

Answer 1

The Correct Option is B

Share Forfeiture and Reissue Calculation 

Scenario: 

• Number of Shares Forfeited: 400
• Face Value per Share: ₹50
• Issue Price: At Par (₹50)
• Final Call Not Paid: ₹10 per share
• Reissue Price: ₹45 per share (fully paid-up)

Calculation Steps:

1. Amount Forfeited per Share:

Face Value - Final Call Not Paid = ₹50 - ₹10 = ₹40

1. Total Amount Forfeited:

Amount Forfeited per Share * Number of Shares Forfeited = ₹40 * 400 = ₹16,000

1. Loss on Reissue per Share:

Face Value - Reissue Price = ₹50 - ₹45 = ₹5

1. Total Loss on Reissue:

Loss on Reissue per Share * Number of Shares Reissued = ₹5 * 400 = ₹2,000

1. Amount Transferred to Capital Reserve:

Total Amount Forfeited - Total Loss on Reissue = ₹16,000 - ₹2,000 = ₹14,000

Therefore, the amount transferred to the Capital Reserve is ₹14,000.

Note: Capital Reserve represents the profit made on the reissue of forfeited shares.

Answer 2

The forfeited amount per share is ₹40 (₹50 - ₹10). For 400 shares, the total forfeited amount is ₹16,000. The shares were reissued at ₹45, causing a loss of ₹5 per share (₹50 - ₹45), totaling ₹2,000 loss. Capital Reserve = Total forfeited amount - Reissue loss = ₹16,000 - ₹2,000 = ₹14,000. Correct Answer: Option 2.