Q.Out of the 300 shares forfeited in the previous question, M Ltd. re-issued 200 shares as fully paid up @ ₹9 per share. Pass the journal entry for re-issue and for the transfer of the resulting balance in the Share Forfeiture Account to Capital Reserve.

Re-issuing at ₹9 (i.e., ₹1 below the ₹10 paid-up value) needs a ₹1-per-share discount, drawn from the money already forfeited on those same 200 shares; whatever is left over becomes Capital Reserve. …

Working.

Of the original forfeiture, ₹1,500 was received on 300 shares, i.e., an average of ₹5 per share forfeited. For the 200 shares now being re-issued, the proportionate forfeited amount = 200 × ₹5 = ₹1,000.

Re-issue price = ₹9 per share (fully paid, face value ₹10), so discount allowed on re-issue = ₹1 per share × 200 shares = ₹200 — charged to the Share Forfeiture A/c (well within the available ₹1,000).

Balance of forfeiture money relating to the 200 re-issued shares, after adjusting the discount = 1,000 − 200 = ₹800 — this is a genuine capital profit and is transferred to Capital Reserve.

The remaining 100 shares are still un-reissued; their proportionate forfeiture money (100 × ₹5 = ₹500) stays in the Share Forfeiture Account untouched, until (and unless) those 100 shares are re-issued too.

| Particulars | Debit (₹) | Credit (₹) |

|---|---|---| …

Transferring the ENTIRE Share Forfeiture Account balance (₹1,500) to Capital Reserve instead of only the proportionate amount relating to the shares actually re-issued (₹1,000, less the ₹200 discount = ₹800); crediting Share C …