Question

X ltd.forfeited 4000 preference share of 10 each for non payment of first & final call rs2 per share.this shares letter reissued @rs9.50 per share as fully paid

Answer 1

Explanation:

Here, 100 shares of Rs 10 each i.e. Rs 1000 were forfeited due to non-payment of final call at Rs 2 per share. Then 60 shares were reissued at Rs 9 i.e. Rs 540 which is the Share capital. When the shares forfeited are reissued at discount, Bank account is debited by the amount received and Share capital account is credited by the paid up amount. Therefore, unpaid shares amount to Rs 2*60 i.e. Rs 120 and calculation of Capital reserve account will be the difference between share capital and amount on unpaid shares i.e. Rs 540-Rs 120 i.e. Rs 420.