Skip to content

CSEET · Fundamentals of Accounting · Introduction to Company Accounts

Meera Ltd. forfeited 50 equity shares of Rs 10 each, fully called, on which Rs 7 per share was paid. The shares were re-issued at Rs 9 per share as fully paid. What is the amount transferred to Capital Reserve?

The capital reserve is Rs 300, which is not offered among the options. The forfeited amount of Rs 350 less the Rs 50 discount on re-issue gives Rs 300.

  1. ARs 100
  2. BRs 150Correct
  3. CRs 200
  4. DRs 350

Explanation

Forfeited amount = 50 x 7 = Rs 350. Discount on re-issue = 50 x (10 - 9) = Rs 50. Capital reserve = 350 - 50 = Rs 300? Check per share: Rs 7 forfeited less Rs 1 discount = Rs 6, so Rs 300 in total. This is not among the options, so the figures must be re-read: the cash received on re-issue is Rs 450 and the forfeited amount Rs 350 totals Rs 800 against capital of Rs 500, giving Rs 300.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Company Accounts shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Company AccountsFree diagnostic mock

More Introduction to Company Accounts questions