How to find capital reserve amount on reissue of share without formula
Dear Student,
(i) When forfeited shares of the company are re-issued , the profit earned on that account is credited to capital reserve. The amount that is to be credited to the capital reserve should only be in respect of the shares that are reissued.
(ii) For Example - A company forfeits 500 shares with Rs. 4 paid-up only and 400 shares with Rs. 6 paid-up. Thus, the balance of forfeiture account will be: (500 x 4) + (400 x 6) = Rs.2000 +Rs.2400 = Rs.4400.
Now, if the company re-issues 400 shares with Rs. 6 paid up at Rs.8 as fully paid up which means that these shares are re-issued at a discount of Rs.2 per share then, the amount that will be transferred to capital reserve will be: [ (Rs.6 + Rs.8) - Rs.10 ] x 400 shares = Rs.1600.
It is simple that from the forfeited money that is Rs.2400 , the discount amount on re-issue of shares that is [ 400 x 2 ] = Rs.800 is deducted and the remaining amount [ 2400 - 800 ] = Rs. 1600 is transferred to capital reserve.
Regards.
(i) When forfeited shares of the company are re-issued , the profit earned on that account is credited to capital reserve. The amount that is to be credited to the capital reserve should only be in respect of the shares that are reissued.
(ii) For Example - A company forfeits 500 shares with Rs. 4 paid-up only and 400 shares with Rs. 6 paid-up. Thus, the balance of forfeiture account will be: (500 x 4) + (400 x 6) = Rs.2000 +Rs.2400 = Rs.4400.
Now, if the company re-issues 400 shares with Rs. 6 paid up at Rs.8 as fully paid up which means that these shares are re-issued at a discount of Rs.2 per share then, the amount that will be transferred to capital reserve will be: [ (Rs.6 + Rs.8) - Rs.10 ] x 400 shares = Rs.1600.
It is simple that from the forfeited money that is Rs.2400 , the discount amount on re-issue of shares that is [ 400 x 2 ] = Rs.800 is deducted and the remaining amount [ 2400 - 800 ] = Rs. 1600 is transferred to capital reserve.
Regards.