A company forfeited 100 shares of ₹10 each, ₹6 paid up, for non- payment of final call of ₹4 each. 60 shares of these were re-issued at ₹8 per share as fully paid up. The amount transferred to Capital Reserve Account would be -
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹240.
Number of shares forfeited = 100
Face value per share = ₹10
Paid-up value per share = ₹6
Final call not paid = ₹4 per share
Journal entry on forfeiture-
Share Capital A/c Dr. ₹1,000 (Calledup amount 100 x 10)
To Share Final Call A/c ₹400 (Not received 100 x 4)
To Share Forfeiture A/c ₹600 (100 X 6 Received amount)
(Forfeiture of 100 shares)
60 shares are reissued
Face value = ₹10 BUT RECEIVED ₹8.
Journal entry on reissue-
Bank A/c Dr. ₹480 (60 x 8)
Share Forfeiture A/c Dr. ₹120 (60 x 2)
To Share Capital A/c ₹600 (60 x 10)
(Reissue of 60 forfeited shares)
Amount forfeited on 100 shares = ₹600
Amount forfeited on 60 shares = 600/100 x 60
= ₹360
Amount used in reissue of shares = ₹120
Amount transferred to capital reserve = 360-120
= ₹240