The director of ‘M’ Ltd., resolved to forfeit 2,000 equity shares of Rs. 10 each Rs. 7.50 per share paid up for non-payment of Final call of Rs. 2.50 per share. 1,000 of the forfeited shares were reissued of Rs. 6 per share fully paid up. Capital Reserve Account will be credited by

The correct answer is: C. Rs. 9,000

Explanation:

The amount received on forfeiture of 2,000 shares = 2,000 x 7.50 = Rs. 15,000.

The amount credited to Capital Reserve Account on reissue of 1,000 shares = 1,000 x 6 = Rs. 6,000.

Therefore, the amount credited to Capital Reserve Account = 15,000 – 6,000 = Rs. 9,000.

Let us now explain each option in brief:

• Option A: Rs. 3,500. This is the amount that would be credited to Capital Reserve Account if all 2,000 shares were reissued at Rs. 6 per share fully paid up. However, only 1,000 shares were reissued, so this option is incorrect.
• Option B: Rs. 7,500. This is the amount that would be credited to Capital Reserve Account if no shares were reissued. However, 1,000 shares were reissued, so this option is also incorrect.
• Option C: Rs. 9,000. This is the correct answer as explained above.
• Option D: Rs. 11,000. This is the amount that would be credited to Capital Reserve Account if all 2,000 shares were reissued at Rs. 10 per share fully paid up. However, only 1,000 shares were reissued, so this option is also incorrect.