High Light India Ltd. invited applications for 30,000 shares of ₹100 each at a premium of ₹ 20 per share payable as follows :

Applications were received for 40,000 shares and pro-rates allotment was made on the application for 35,000 share. Excess application money was utilised towards allotment.

Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment.

Aman who applied for 1,050 shares failed to pay first call and his shares were forfeited immediately after first call.

Second and final call was made. All the money due on second call have been received.

Of the shares forfeited 1,000 shares were reissued as fully paid-up for 80 per share, which include the whole of Aman's shares.

Answer the question on the basis of the information given.

State the treatment of profit on the shares reissued.

Credit Capital Reserve by ₹28,666

The correct answer is option 2- Credit Capital Reserve by ₹28,666.

Forfeiture of Rohan's shares-

Share Capital A/c Dr.                      ₹30,000 ( Calledup amount- 600 x 50)
Securities Premium Reserve A/c Dr.  ₹6,000  (600 x 10)
      To Share Allotment A/c                             ₹14,000 (Amount not received on allotment)
      To Share Forfeiture A/c                             ₹22,000 (Amount received)
(Forfeiture of 600 shares of Rohan for non-payment of allotment money)

Forfeiture of Aman's share-

Share Capital A/c Dr.    ₹72,000 (Calledup amount 900 x 80)
       To Share First Call A/c     ₹27,000 (Not received 900 x 30)
       To Share Forfeiture A/c   ₹45,000 (Received amount)
(Forfeiture of 900 shares of Aman)

1000 shares have been reissued including 900 shares of Aman and Balance 100 shares of Rohan.

Bank A/c Dr.                  ₹80,000
Share Forfeiture A/c Dr.  ₹20,000
       To Share Capital A/c            ₹1,00,000
(Reissue of 1,000 forfeited shares)

Gain on Rohan's share-
Gain on 600 shares = ₹22,000
Gain on 100 shares = 22,000/600 x 100
                             = 3,666.66 or ₹3667.

Gain on Aman's share-
Gain in 900 shares = ₹45,000

Total = 3667 + 45,000
        = 48,667
Less: 20,000 (Loss on reissue of 1,000 shares)

Transferred to Capital Reserve = 48,667 - 20,000
                                             = 28,667