The director of Poly Plastic Limited resolved that 200 equity shares of Rs.100 each be forfeited for non-payment of the second and final call of Rs.30 per share. Out of these, 150 shares were re-issued at Rs.60 per share to Mohit. Journal entry for creating capital reserve will be:

Looking at the forfeiture and re-issue of shares to determine the capital reserve amount:

Calculation of amount forfeited per share:

• Face value per share = Rs.100
• Final call not paid = Rs.30
• Amount already paid per share = Rs.100 - Rs.30 = Rs.70

When 200 shares were forfeited, the total amount in Shares Forfeiture Account = 200 × Rs.70 = Rs.14,000

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Re-issue of 150 shares:

Re-issue price per share = Rs.60

Since re-issue price (Rs.60) is less than face value (Rs.100), there is a discount of Rs.40 per share.

Total discount on re-issue = 150 × Rs.40 = Rs.6,000

This discount is adjusted against the Shares Forfeiture Account of those 150 re-issued shares.

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Amount available for Capital Reserve:

For the 150 re-issued shares:

• Amount forfeited = 150 × Rs.70 = Rs.10,500
• Less: Discount on re-issue = Rs.6,000
• Balance transferred to Capital Reserve = Rs.4,500

The forfeited amount relating to the 50 shares not re-issued (Rs.3,500) remains in Shares Forfeiture Account and is not transferred to Capital Reserve yet.

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Journal Entry:

Particulars	Debit (Rs.)	Credit (Rs.)
Shares Forfeiture A/c Dr.	4,500
To Capital Reserve A/c		4,500

Correct Option: 3