Allahabad company limited forfeited 50 shares of Rs. 10 each. Rs. 6 per share were paid on then. Out of these 10 shares were re-issued at Rs. 6.50 Per share fully paid up. Amount transferred to capital reserve will be

[amp_mcq option1=”65″ option2=”35″ option3=”25″ option4=”32.5″ correct=”option4″]

The correct answer is D. 32.50

The amount transferred to capital reserve is calculated as follows:

• Face value of the shares forfeited = 50 x 10 = 500
• Paid-up value of the shares forfeited = 50 x 6 = 300
• Amount received on re-issue of shares = 10 x 6.50 = 65
• Amount transferred to capital reserve = 500 – 300 + 65 = 325

Option A is incorrect because it is the total amount received on re-issue of shares.
Option B is incorrect because it is the paid-up value of the shares forfeited.
Option C is incorrect because it is the face value of the shares forfeited.