Mona Ltd. has Rs. 5 crores capital divided into equity shares of Rs. 10 each. It decided to setup a new plant in Bihar. For this purpose the company issued 10,000 shares of Rs. 10 each at Rs. 11 per share. The money was payable as follows
Rs. 3 on application
Rs. 4 on allotment - (including premium)
Rs. 4 on first and final call
Applications were received for 12000 shares & the directors made pro-rata allotment Mr. Sharma an applicant for 120 shares could not pay the allotment and call money and Mr. Verma, a holder of 200 shares, failed to pay the call money. All these shares were forfeited out of the forfeited shares, 150 shares (the whole of Mr. Sharma's shares being included) were issued at Rs. 8 per share. Answer the following questions:-
The amount transferred to Capital Reserve would be
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 360
Only the forfeited amount on the shares that are reissued, less the discount on reissue, is a capital profit to be transferred to the Capital Reserve. The 150 shares reissued are Mr. Sharma’s 100 shares and 50 of Mr. Verma’s shares.
Forfeited on Mr. Sharma’s 100 shares (application money on 120 shares @ Rs. 3) = Rs. 360
Forfeited on 50 of Mr. Verma’s shares @ Rs. 6 = Rs. 300
Total forfeited on the 150 reissued shares = Rs. 660
Less: Discount on reissue = 150 × (Rs. 10 − Rs. 8) = Rs. 300
Transferred to Capital Reserve = Rs. 360
NCERT (2026-27 edition):
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