Question

M Ltd. forfeited 160 shares of Rs 10 each, on which only application money of Rs. 2

was paid. These shares were reissued for Rs. 9 per share. The amount transferred to

capital reserve will be:

(a) Rs. 160

(b) Rs. 320

(c) Rs. 180

(d) None of these​

Answer 1

Answer:

Shareholder paid rs 2 on share so company profit is rs 2per share the these shares were reissued rs 9 per share it means rs 1 loss per share

Share forfeiture = 160*2= 320

(-) loss on reissue = 160*1= 160

Amount transferred to capital reserve = 320-160=160

Answer 2

Given,

Number of shares= 160

Amount of each share = Rs. 10

Application money = Rs. 2

Reissued price= Rs. 9 per share

To find,

Amount transferred to the capital reserve

Solution,

Using the following mathematical technique, we can easily answer this mathematical issue.

The following is the procedure for calculating the amount transferred to the capital reserve.

We know that the corporate profit is Rs 2 per share since shareholders paid Rs 2 per share. These shares were reissued for Rs. 9 per share, resulting in a Rs 1 loss per share.

Thus,

Share price = 160 × 2

                          = Rs 320

Reissue loss = (-) 160×1

                     = (-) Rs. 160

Transferred amount to capital reserve = Rs. (320-160)

                                                                  = Rs. 160

As a consequence, we can conclude that the amount transferred to the capital reserve is Rs. 160. (Option a)