Question

The director of Priya Polymer Limited resolved that 200 equity shares of Rs. 100 each be forfeited for non-payment of the second and final call of Rs. 30 per share. Out of these, 150 shares were re-issued at Rs. 60 per share to Monit. The amount of capital reserve will be:

• A. Rs. 4000
• B. Rs. 4500
• C. Rs. 5500
• D. Rs. 5000

Hint:

Forfeited amount is first used to cover reissue discount. Any remaining balance is transferred to Capital Reserve.

Answer 1

The Correct Option is B

Step 1: Forfeiture of shares.
- Face value of shares = Rs. 100 each - Number of forfeited shares = 200 - Amount not paid (final call) = Rs. 30 per share - Amount paid = Rs. 70 per share \[ 200 \times 70 = Rs. 14,000 \text{(Forfeited amount)} \]

Step 2: Reissue of shares.
- 150 shares reissued at Rs. 60 each. - Face value = Rs. 100 each, so discount on reissue = Rs. 40 per share. - Total discount = \( 150 \times 40 = Rs. 6,000 \).

Step 3: Treatment of forfeited amount.
- Forfeited amount for 150 shares = \( 150 \times 70 = Rs. 10,500 \). - Out of this, Rs. 6,000 is used to cover discount on reissue. - Balance = \( 10,500 - 6,000 = Rs. 4,500 \) transferred to Capital Reserve.

Final Answer: \[ \boxed{\text{Capital Reserve = Rs. 4,500}} \]