A company reissued 100 shares of ₹10 at ₹9 fully paid up. The amount in share Forfeiture Account for these shares was ₹300. How much amount would be transferred to Capital Reserve Account?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹200.
Journal entry on reissue:
Bank A/c Dr. 900 (100 x 9)
Share Forfeiture A/c Dr. 100 (100 x 1)
To Share Capital A/c 1,000 (100 x 10)
(Reissue of 100 forfeited shares at Rs. 9 per share as fully paid)
This shall leave a balance of Rs. 200 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)
So, ₹200 is transferred to capital reserve.