Question

NUK Ltd. forfeited 1,000 shares of ₹ 10 each, fully called up for non-payment of final call of ₹ 2 per share. 800 of these shares were reissued at ₹ 11 per share fully paid. The amount credited to Capital Reserve Account will be:

• A. ₹ 6,400
• B. ₹ 8,000
• C. ₹ 7,200
• D. ₹ 10,000

Hint:

When forfeited shares are reissued at a premium, the forfeited amount of reissued shares is credited to the Capital Reserve.

Answer 1

The Correct Option is A

1. Forfeited Amount Per Share: The paid amount per share is calculated as ₹ 10 (fully called-up) minus ₹ 2 (unpaid final call), resulting in ₹ 8. 2. Total Forfeited Amount: The total forfeited amount for 1,000 shares is ₹ 8 multiplied by 1,000, equalling ₹ 8,000. 3. Reissue Details: 800 shares were reissued at a price of ₹ 11 per share, generating a total reissue amount of ₹ 11 multiplied by 800, which is ₹ 8,800. 4. Capital Reserve Calculation: The forfeited amount pertaining to the reissued shares amounts to ₹ 8 multiplied by 800, totalling ₹ 6,400. This entire forfeited amount from the reissued shares is transferred to the Capital Reserve since no discount was applied during the reissue. \[ \text{Capital Reserve} = ₹ 6,400. \]