Question

400 shares of ₹50 each issued at par were forfeited for non-payment of final call of ₹10 per share. These shares were reissued at ₹45 per share as fully paid-up. The amount transferred to capital reserve is

• A. ₹15,000
• B. ₹14,000
• C. ₹16,000
• D. ₹13,000

Answer 1

The Correct Option is B

To find the amount transferred to the capital reserve when shares are reissued, we first need to analyze the details of the forfeited and reissued shares.

1. Original Issue Details:
Number of shares = 400
Face value per share = ₹50
Final call not paid per share = ₹10
Total amount unpaid = 400 shares × ₹10 = ₹4,000

2. Forfeiture Accounting:
Upon forfeiture, the amount received till the call = (Original face value - Unpaid call amount) per share
= ₹50 - ₹10 = ₹40 per share
Total amount received for forfeited shares before reissue = 400 shares × ₹40 = ₹16,000

3. Reissue Details:
Reissue price per share = ₹45
Total reissue amount = 400 shares × ₹45 = ₹18,000

4. Capital Reserve Calculation:
Total amount received before reissue + reissue amount = ₹16,000 + ₹18,000 = ₹34,000
Since the shares are reissued as fully paid up, the face value of reissued shares = 400 × ₹50 = ₹20,000.
Profit on reissue is the amount received - face value.
Profit = ₹34,000 - ₹20,000 = ₹14,000

Therefore, the amount transferred to the capital reserve is ₹14,000.

Answer 2

We are given the following information:

• 400 shares of ₹ 50 each were issued at par.
• The final call of ₹ 10 per share was not paid, so these shares were forfeited.
• These shares were reissued at ₹ 45 per share as fully paid-up.

To find the amount transferred to the capital reserve, we need to calculate the amount forfeited on these shares.

Step 1: Amount forfeited per share:

The amount received on the forfeited shares before the final call was:

Amount received before final call = Issued price - Final call = ₹ 50 - ₹ 10 = ₹ 40

When the shares are reissued at ₹ 45 per share, the amount received is ₹ 45. The amount transferred to the capital reserve is the difference between the reissue price and the amount already received:

Amount transferred to capital reserve per share = Reissue price - Amount received before final call = ₹ 45 - ₹ 40 = ₹ 5

Step 2: Total amount transferred to capital reserve:

Since there are 400 shares, the total amount transferred to capital reserve is:

Total amount transferred to capital reserve = 400 × ₹ 5 = ₹ 2,000

Therefore, the total amount transferred to the capital reserve is ₹ 2,000.

Total Amount Forfeited - Total Loss on Reissue = ₹16,000 - ₹2,000 = ₹14,000