The directors of Y limited forfeited 200 preference shares of ₹ 100 each for non payment of call money of ₹30 per share. Out of this 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.
Journal entry for forfeiture-
Share Capital A/c Dr. ₹20,000 (200 x 100)
To Share call A/c ₹6,000 (200 x 30)
To Share Forfeiture A/c ₹14,000 (200 x 70)
150 were reissued at ₹ 60 per share as fully paid up.
Journal entry for reissue-
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)
Amount related to share forfeiture for 150 shares = 14,000/200 x 150
= ₹10,500
Amount used in reissue = 6,000
Amount transferred to capital reserve = 10,500 - 6,000
= ₹4,500