Mohan Ltd. forfeited 300 shares of ₹100 each, ₹70 called up, for non payment of final call of ₹20 per share. Out of these 200 shares were reissued for ₹60 per share as ₹70 paid up. What amount to be transferred to Capital Reserve account?
Answer & explanation
Correct answer: option 4
The correct answer is option (4) - ₹8,000.
₹8,000 is transferred to capital reserve account.
Journal entry for forfeiture of 300 shares-
Share Capital A/c Dr. ₹21,000 (300 x 70) Calledup amount
To Share Final call A/c ₹6,000 (300 x 20) Unpaid amount
To Share Forfeiture A/c ₹15,000 (300 x 50) Paid amount
200 were reissued at ₹60 per share as ₹70 paid up.
Journal entry for reissue of 200 shares-
Bank A/c Dr. ₹12,000 (200 x 60)
Share forfeiture A/c Dr. ₹2,000 (200 x 10)
To Share Capital A/c ₹14,000 (200 x 70)
Amount related to share forfeiture for 200 shares = 15,000/300 x 200
= ₹10,000
Amount used in reissue = ₹2,000
Amount transferred to capital reserve = 10,000 - 2,000
= ₹8,000
Thus, ₹8,000 is transferred to capital reserve account.