Question

Anmol Ltd. has share capital of $Rs.1,00,000$ and general reserve of $Rs.1,20,000$. It proposes to issue share out of general reserve in such a way that after issue of shares the remaining balance in general reserve should be equal to $25\%$ of the total capital (new). Find the remaining reserve.

• A. $Rs.25,000$
• B. $Rs.30,000$
• C. $Rs.44,000$
• D. $Rs.70,000$

Answer 1

The correct option is C $Rs.44,000$

Let the New Share Capital be ${}^{\prime }{x}^{\prime }$

New General Reserve balance = $Rs.1,20,000{-}^{\prime }{x}^{\prime }$

Balance after issue of share out of general reserve= $25$ of [$1,00,000+x$]

Therefore, $1,20,000{-}^{\prime }x$'= $25$% [$1,00,000$+${}^{\prime }{x}^{\prime }$]

On solving the equation 'x'=$76,000$

General Reserve= $1,20,000-76,000$= $Rs.44,000$.