Answer questions on the basis of following case study.
Banjara Ltd. invited applications for 30,000 Shares of ₹100 each at a premium of ₹20 per share payable as follows:
On Application ₹40 (including ₹10 premium)
On Allotment ₹30 (including ₹10 premium)
On First Call ₹30
On Second and Final Call ₹20
Applications were received for 40,000 shares and pro-rata allotment was made on the application for 35,000 share. Excess application money was utilised towards allotment. Astha to whom 600 shares were allotted failed to pay the allotment money and her shares were forfeited immediately after allotment. Rekha who applied for 1,050 shares failed to pay first call and her shares were forfeited immediately after first Call. Second and final call was made. All the money due on second call have been received. Of the shares forfeited, 1,000 share were reissued as fully paid-up for ₹80 per share, which included the whole of Astha's shares.
Calculate the Amount to be transferred to the Capital Reserve:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹22,000
When forfeited shares are reissued, the forfeiture amount on those shares, less the discount allowed on reissue, is a capital profit and goes to Capital Reserve. The 1,000 shares reissued are all 600 of Astha’s shares and 400 of Rekha’s 900 shares.
Forfeited amount on Astha’s 600 shares:
Application money paid = 700 × ₹40 = ₹28,000
Less: premium on application = 600 × ₹10 = ₹6,000
Credited to Share Forfeiture = ₹22,000
Forfeited amount on 400 of Rekha’s shares = 400 × ₹50 = ₹20,000
Discount on reissue = 1,000 × (₹100 − ₹80) = ₹20,000
Capital Reserve:
= ₹22,000 + ₹20,000 − ₹20,000
= ₹22,000
In the NCERT illustration below (Illustration 14), the 1,000 reissued shares include the whole of Aman’s 900 shares instead, so its Capital Reserve figure is different; here they include the whole of Astha’s 600 shares. In the book’s solution ₹48,667 is the gain on its 1,000 reissued shares and ₹18,333 the balance left on 500 shares, so neither is the Capital Reserve here.
NCERT (2026-27 edition):
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