A company reissued 150 shares out of 450 shares of ₹10 at ₹8 as fully paid up. The balance in forfeiture Account for 450 shares was of ₹1500. How much amount would be transferred to Capital Reserve Account?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹200.
Bank A/c Dr. ₹1,200
Share Forfeiture A/c Dr. ₹300
To Share Capital A/c ₹1,500
(Reissue of 150 forfeited shares at Rs. 8 per share as fully paid)
The balance in forfeiture Account for 450 shares was of ₹1,500.
Amount related to 150 shares = 1,500/450 x 150
= ₹500
This shall leave a balance of ₹200 (500-300) in share forfeited account which should be transferred to Capital Reserve Account by recording the following journal entry:
Share Forfeiture A/c Dr. ₹200
To Capital Reserve ₹200
(Profit on reissue of forfeiture)