JM Ltd. forfeited 400 shares of ` 10 each issued at a premium of ` 5 per share for the non payment of final call of ` 2 per share. There shares were re-issued for ` 4900 as fully paid up. The amount transferred in the ‘Capital Reserve Account’ on the forteiture of these shares will be :

Correct option is A

The correct option is (a) ₹3200. 
Here is the step-by-step calculation of the amount transferred to the Capital Reserve Account: 
Calculation of the Amount Transferred to Capital Reserve 
The amount transferred to the Capital Reserve Account is the gain made on the re-issue of forfeited shares. This gain is calculated as the total amount originally forfeited minus the discount allowed on re-issue. 
1. Calculate the amount forfeited per share (amount received): 
The shares were issued at a face value of ₹10 with a premium of ₹5. The final call of ₹2 was not paid. The remaining amount (excluding the premium received) is the amount forfeited. The premium received is not reversed at forfeiture. 
· Face Value = ₹10
· Unpaid Call (Final Call) = ₹2
· Amount received per share on capital account (forfeited amount per share) = Face Value - Unpaid Call
· Amount received per share = ₹10 - ₹2 = ₹8 
Total amount forfeited on 400 shares = 400 shares
₹8/share = ₹3,200. 
(Note: The securities premium is ignored for this calculation as it was received by the company and remains in the Securities Premium Account.) 
2. Calculate the discount allowed on re-issue: 
The shares were re-issued for a lump sum of ₹4,900 as "fully paid up" (meaning the paid-up value is the full face value of ₹10). 
· Re-issue price per share = ₹4,900 / 400 shares = ₹12.25 per share.
· The re-issue price of ₹12.25 is higher than the fully paid-up value of ₹10. Therefore, no discount was applied. The shares were re-issued at a premium.
· Discount allowed on re-issue = ₹0. 
3. Calculate the amount transferred to Capital Reserve: 
The full amount forfeited (₹3,200) is a capital gain, as no discount was used up during the re-issue process. 
· Amount for Capital Reserve = Total Amount Forfeited - Discount on Re-issue
· Amount for Capital Reserve = ₹3,200 - ₹0 = ₹3,200.