Question : 500 shares of Rs.20 each on which first and final call of Rs.6 per share is not paid is forfeited. Out of these, 200 shares are reissued for Rs.14 per share fully paid up. The amount transferred to the capital reserve will be:
Option 1: Rs.2,000
Option 2: Rs.1,600
Option 3: Rs.1,000
Option 4: Rs.1,750
Correct Answer: Rs.1,600
Solution : Amount to be credited to Share Forfeiture A/c = 500 X Rs.14 = Rs.7,000 Number of shares reissued = 200 Amount debited to Share Forfeited = Rs.200 X Rs.6 = Rs.1,200. Profit transferred to capital reserve = Rs.[(7,000/500) X 200 - 1,200] = Rs.1,600. Hence, the correct option is 2.
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