Question

Java Ltd. forfeited 600 equity shares of ₹100 each ₹80 called up for the non-payment of first call of ₹20 per share. These shares were reissued at ₹90 per share fully paid up. The amount transferred to ‘Capital Reserve’ will be:

• A. ₹36,000
• B. ₹30,000
• C. ₹48,000
• D. ₹54,000

Hint:

Capital Reserve = Forfeiture Amount – Discount on Reissue. Full amount of forfeiture goes to capital reserve if reissued at a premium.

Answer 1

The Correct Option is A

Step 1: Calculate amount received before forfeiture
Face value per share = ₹100
Called-up amount = ₹80
Unpaid = ₹20
Paid = ₹60 per share
Number of shares forfeited = 600
Amount forfeited = 600 × ₹60 = ₹36,000
Step 2: Calculate reissue value
Shares reissued @ ₹90 fully paid up
Discount on reissue = ₹10 (since face value is ₹100)
Total discount = 600 × ₹10 = ₹6,000
Step 3: Adjust discount out of forfeited amount
Amount left in Share Forfeiture Account = ₹36,000 - ₹6,000 = ₹30,000
This remaining balance is profit on reissue of forfeited shares and is transferred to Capital Reserve.
$\Rightarrow$ Capital Reserve = ₹36,000