400 shares of ₹50 each issued at par were forfeited for non-payment of the final call of ₹10 per share. These shares were reissued at ₹45 per share as fully paid-up. The amount transferred to capital reserve:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹14,000
Journal entry on forfeiture-
Share Capital A/c Dr. ₹20,000 (Calledup amount 400 x 50)
To Share Final Call A/c ₹4,000 (Not received 400 x 10)
To Share Forfeiture A/c ₹16,000 (400 X 40 Received amount)
(Forfeiture of 400 shares)
Journal entry on reissue-
Bank A/c Dr. ₹18,000 (400 x 45)
Share Forfeiture A/c Dr. ₹2,000 (400 x 5)
To Share Capital A/c ₹20,000 (400 x 50)
(Reissue of 400 forfeited shares)
Amount used in reissue = 2,000
Amount available in share forfeiture = 16,000
Amount transferred to capital reserve = 16,000 - 2,000
= 14,000