When Gokul Ltd. forfeits shares and later reissues them, the accounting involves tracking the called-up amount, the unpaid allotment, share premium, and capital reserve. Let’s solve step by step.
Given:
• Total forfeited shares = 1,000
• Face value per share = ₹10
• Called-up amount = ₹8 per share
• Unpaid allotment = ₹5 per share (includes ₹2 premium)
• Amount transferred to Capital Reserve = ₹3,200
• Reissue price = ₹7 per share
Step 1: Amount received per reissued share
Each forfeited share has ₹8 called-up, but ₹5 allotment was unpaid. Therefore, the amount originally received per share = ₹8 − ₹5 = ₹3.
Step 2: Loss or profit on reissue
Reissue price = ₹7
Amount received earlier = ₹3
Difference = ₹7 − ₹3 = ₹4 per share
Part of this ₹4 represents capital reserve (premium portion) and the rest adjusts the forfeited capital.
Step 3: Capital Reserve transferred
It is given that Capital Reserve transferred = ₹3,200
Let the number of shares reissued = x
Each reissued share contributes ₹4 to Capital Reserve. Therefore:
x × ₹4 = ₹3,200
x = 3,200 ÷ 4
x = 800 shares
Step 4: Conclusion
Hence, 800 shares were reissued, and the profit arising on the reissue of forfeited shares amounting to ₹3,200 was transferred to Capital Reserve.