The directors of Y Limited forfeited 200 preference shares of ₹ 100 each for non-payment of the final call of ₹30 per share. Out of these, 150 were reissued at ₹60 per share as fully paid up. Find the amount transferred to capital reserve.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹4,500
When forfeited shares are reissued at a discount, the discount is debited to the Share Forfeiture Account. What is left of the amount forfeited on the shares reissued is a capital profit and is transferred to Capital Reserve; the amount on the shares not yet reissued stays in the forfeiture account.
Amount received per share before forfeiture = ₹100 − ₹30 = ₹70
Amount forfeited on 150 reissued shares = 150 × ₹70 = ₹10,500
Discount on reissue = 150 × (₹100 − ₹60) = ₹6,000
Transferred to capital reserve = ₹10,500 − ₹6,000 = ₹4,500
Note: The forfeited amount on the other 50 shares (₹3,500) is not transferred until those shares are reissued; taking all 200 shares gives the wrong figure of ₹8,000.
NCERT (2026-27 edition):
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