CA Foundation · Accounting · Company Accounts
Nair Ltd. forfeited 50 equity shares of ₹10 each, fully called up, on which ₹6 per share had been paid. All 50 shares were re-issued at ₹8 per share as fully paid up. What is the amount transferred to Capital Reserve?
₹200 is transferred to Capital Reserve. The Share Forfeiture balance is ₹300 (₹6 x 50), and the discount on re-issue is ₹100 (₹2 x 50). The remaining gain of ₹200 is a capital profit and goes to Capital Reserve.
- A₹100
- B₹200Correct
- C₹300
- D₹0
Explanation
Forfeited amount = 6 x 50 = ₹300. Loss on re-issue = discount allowed = (10 - 8) x 50 = ₹100. Capital profit = 300 - 100 = ₹200, transferred to Capital Reserve. Transferring ₹100 would wrongly use only the discount.
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