Question

200 shares of Rs.100 each issued at a premium of Rs.10 were forfeited for the non-payment of allotment money of Rs.60 per share including premium. The first and final call of Rs.20 per share on these shares were not made. The forfeited shares were reissued at Rs.70 per share as fully paid-up. Find the amount of capital reserve.

• A. Rs 4000
• B. Rs 6000
• C. Rs 14000
• D. Nil

Hint:

Money received on forfeited shares = 110 - 60 - 20 = Rs. 30 per share. Discount on reissue = 100 - 70 = Rs. 30. Capital reserve = 30 - 30.

Answer 1

The Correct Option is D

Step 1: Follow the total cash received
Think about the whole life of one share. The first holder paid only Rs. 30 (application money), because allotment Rs. 60 was unpaid and the call Rs. 20 was never made.
The new holder pays Rs. 70 on reissue.

Step 2: Add up what the company holds
Total received in the end per share = 30 + 70 = Rs. 100.
The face value of the share is also Rs. 100. So the company is exactly at par: no gain and no loss.

Step 3: Compute the reserve directly
Capital reserve = forfeited amount - discount on reissue, per share.
\[ 30 - (100 - 70) = 30 - 30 = 0 \]

Step 4: Total for 200 shares
\[ 200 \times 0 = 0 \]

Step 5: Conclusion
Since the total gain is zero, the capital reserve is Nil.

Final Answer:
Capital reserve is Nil. \[ \boxed{\text{Nil}} \]