Question

Gokul Ltd. forfeited 1,000 shares of ₹10 each (₹8 called-up) for non-payment of ₹5 allotment (including ₹2 premium). If ₹3,200 was transferred to Capital Reserve after reissuing some shares at ₹7, how many shares were reissued?

Hint:

In forfeiture problems:

Do NOT include unpaid securities premium in forfeiture
Capital Reserve = forfeiture (capital only) – discount on reissue

Answer 1

Concept: On reissue of forfeited shares:

Discount on reissue is debited to Share Forfeiture A/c
Balance in Share Forfeiture related to reissued shares → transferred to Capital Reserve
\[ \text{Capital Reserve} = \text{Forfeiture per share} - \text{Discount per share} \]
Step 1: Amount received before forfeiture. Face value = ₹10 Called-up = ₹8 Unpaid allotment = ₹5 (includes ₹2 premium) So amount received per share before forfeiture: \[ 8 - 5 = ₹3 \] Thus forfeiture amount per share = ₹3.
Step 2: Reissue price and discount. Shares reissued at ₹7. Called-up value = ₹8 Discount per share: \[ 8 - 7 = ₹1 \]
Step 3: Gain transferred to Capital Reserve per share. \[ \text{Gain per share} = 3 - 1 = ₹2 \]
Step 4: Total Capital Reserve given. \[ \text{Capital Reserve} = ₹3{,}200 \] Let number of shares reissued = \( x \) \[ 2x = 3{,}200 \] \[ x = 1{,}600 \] But total forfeited shares = 1,000. So maximum reissue cannot exceed 1,000. Hence, adjust logic: Capital Reserve comes only from forfeiture related to reissued shares. Correct forfeiture per share must include premium portion: Premium ₹2 was unpaid → not credited to forfeiture. So forfeiture amount per share actually: \[ \text{Amount received} = Application + part of allotment excluding premium \] Since ₹5 unpaid includes ₹2 premium → ₹3 capital unpaid. Thus capital received per share: \[ 8 - 3 = ₹5 \] Correct forfeiture per share = ₹5.
Step 5: Revised gain per share. \[ \text{Gain per share} = 5 - 1 = ₹4 \]
Step 6: Calculate shares reissued. \[ 4x = 3{,}200 \] \[ x = 800 \] Final Answer: \[ \boxed{800 \text{ shares reissued}} \]