The director of Priya polymer Limited resolved that 200 equity shares of ₹100 each be forfeited for non-payment of the second and final call of ₹30 per share. Out of these, 150 shares were re-issued at ₹60 per share to Monit. The amount of capital reserve will be:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹4,500.
Journal entry on forfeiture of shares is-
Share Capital A/c Dr. 20,000 (200 x 100)
To Shares Forfeiture A/c 14,000 (200 x 70)
To Share Final Call A/c 6,000 (200 x 30)
(200 shares forfeited)
Journal entry on reissue of 150 shares is-
Bank A/c Dr. 9,000 (150 x 60)
Share forfeiture A/c Dr. 6,000 (150 x 40)
To Share Capital A/c 15,000 (150 x 100)
(Reissue of 150 shares)
Amount in share forfeiture A/c for 200 shares = 14,000
Amount related to 150 shares in share forfeiture A/c = 14,000/200 x 150
= 10,500
Amount used in reissue of shares is 6,000.
Amount transferred to Capital reserve = 10,500 - 6,000
= 4,500