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Question
Choose the appropriate alternative from the given options:
On the forfeiture of 100 shares of ₹ 50 each, ₹ 2,500 were credited to share forfeited account. These shares were re-issued at ₹ 25 per share fully paid up. The amount credited to 'Capital Reserve Account' will be:
Options
₹ 2,500
₹ 5,000
No amount
₹ 3,000
Solution
Since, the amount debited to Share Forfeiture Account at the time of reissue is ₹2,500 (i.e.₹25 × 100). Therefore, the entire amount has been utilized at the time of reissue and there will be no gain to be transferred to the Capital Reserve of the company.
Hence, the correct answer is ₹ 2,500.
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