Question

W Ltd. forfeited 400 equity shares of Rs. 10 fully called-up, held by Mr. P for non-payment of final of Rs. 3 each. However, he paid application money @ Rs. 2, Allotment at Rs. 2 and First call at Rs. 3 per share. These shares were reissued at Rs. 7 each. On reissue, amount to be transferred to Capital Reserve Account will be _____.

• A. Rs. 2,400
• B. Rs. 1,600
• C. Rs. 1,200
• D. Rs. 400

Answer 1

The correct option is B Rs. 1,600

Here, 400 shares were forfeited of Rs 10 each and there was non-payment of Rs 3 per share which makes it Rs 1200. The allotment money was also paid at Rs 2 per share i.e. total of Rs 800 and application money was paid at Rs 2 per share i.e. Rs 800 and first call was paid at Rs 3 per share i.e. Rs 1200. The non paid share was reissued at Rs 7 each i.e. Rs 2800. So, amount to be transferred to capital reserve on reissue account will be calculated after deducting the amount on unpaid shares from reissued shares i.e. Rs 4000- Rs 2800 i.e. Rs 1200.