The directors of a company forfeited 400 equity shares of ₹10 each fully called up on which ₹1,600 had been paid. All the forfeited shares were reissued upon payment of ₹3,000. Calculate the amount transferred to Capital Reserve.

₹600

The correct answer is option 2- ₹600.

The journal entry on the forfeiture of shares-
Share Capital A/c    Dr.            ₹4,000 (400 x 10)
           To Share forfeiture A/c              ₹1,600 (400 x 4)
           To share call A/c                       ₹2,400 (400 x 6)
(Shares forfeited)

The journal entry on the reissue of shares-
Bank A/c               Dr.                 ₹3,000 (400 x 7.5)
Share forfeiture A/c                   ₹1,000 (400 x 2.5)
    To share capital A/c                            ₹4,000 (400 x 10)
(Reissue of shares)

Amount available in share forfeiture = 1,600
Amount used in reissue = 1,000
Amount transferred to capital reserve = 1,600 - 1,000
                                                               = ₹600