A ltd forfeited 100 shares of ₹10 each for non-payment of final call of ₹3 per share. All the forfeited shares were re-issued at ₹9 per share. What amount will be transferred to Capital Reserve A/c?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹600.
Total shares = 100
Par value of each share = ₹10
Unpaid amount per share = ₹3 (final call)
Total amount received = 10 - 3
= ₹7
Amount Forfeited = 100 x 7
= ₹700 (Received amount)
Journal entry on forfeiture:
Share Capital A/c Dr. ₹1000 ( 100 x 10)
To Share final Call A/c ₹300 (100 x 3)
To share forfeiture A/c ₹700 (100 x 7)
Shares are reissued at ₹9 each means there is Loss on Reissue of ₹1 per share.
Amount received on share reissue = 100 x 9
= ₹900
Loss on reissue = 100 x 1
= ₹100
Amount transferred to capital reserve = 700 - 100
= ₹600