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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Computer Mart Ltd. forfeited 1,000 Equity Shares of ₹50 each, issued at a 10% premium, on which the allotment money of ₹15 per share (including premium) and the first call of ₹15 per share were not received; the second and final call of ₹10 per share was not yet made. Calculate the ‘Discount Allowed or Premium Received’ and the ‘Amount transferred to Capital Reserve’ on reissue of the shares as fully paid-up in each of the following cases: Case 1: reissued as ₹40 paid-up for ₹45 per share. Case 2: reissued as ₹40 paid-up for ₹40 per share. Case 3: reissued as ₹40 paid-up for ₹35 per share. Case 4: reissued as ₹40 paid-up for ₹25 per share. Case 5: reissued at ₹35 per share as fully paid-up.
Amount forfeited (application money received, since allotment and first call were unpaid) = ₹15 per share × 1,000 shares = ₹15,000.
RESULT OF REISSUE
| Case | Discount Allowed / Premium Received | Amount to Capital Reserve |
|---|---|---|
| 1: ₹40 paid-up, reissued for ₹45 (45 – 40 = 5 excess) | Premium ₹5,000 | ₹15,000 |
| 2: ₹40 paid-up, reissued for ₹40 (exact match) | Nil | ₹15,000 |
| 3: ₹40 paid-up, reissued for ₹35 (40 – 35 = 5 shortfall) | Discount ₹5,000 | ₹10,000 |
| 4: ₹40 paid-up, reissued for ₹25 (40 – 25 = 15 shortfall) | Discount ₹15,000 | Nil |
| 5: Fully paid-up (₹50), reissued for ₹35 (50 – 35 = 15 shortfall) | Discount ₹15,000 | Nil |
Reasoning: In Cases 1 and 2, the reissue price meets or exceeds the “paid-up” target of ₹40, so no part of the forfeited amount is needed to fund a discount, and the full ₹15,000 forfeited is credited to Capital Reserve (any excess over ₹40 in Case 1 is a fresh premium). In Cases 3-5, the shortfall between the target paid-up value and the reissue price is a discount, funded first out of the forfeited amount, reducing what is left for Capital Reserve; in Case 4 and Case 5 the discount exactly exhausts the ₹15,000 forfeited, leaving nothing for Capital Reserve (and confirming the discount does not exceed the statutory maximum of the amount forfeited).
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 1 Q.60 - Share Capital", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Share Capital.
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