Explanation:

Let’s break down the question and the options in real terms:

- 500 shares of ?100 each were forfeited because the holder didn’t pay the first call of ?30 per share. The last ?10 final call wasn’t even asked for yet—so it’s unpaid and not relevant here.

- Up to the first call, ?70 per share must have been paid (that’s the application and allotment). So, paid = 70 x 500 = ?35,000.

- The unpaid first call totals ?30 x 500 = ?15,000.

- Those shares got snapped up again for ?65,000 (that’s ?130 per share if you’re curious).

- When shares are reissued at a price less than face value, the difference between their face value and reissue price, up to amount forfeited, goes to Capital Reserve.

Here’s what matters:

- Company got ?35,000 earlier, now ?65,000 more—so total ?1,00,000 (which is the original share value).

- Amount forfeited = amount already received (?70 x 500 = ?35,000).

- Loss on reissue = original value – reissue price = ?1,00,000 – ?65,000 = ?35,000.

- But, company only received ?65,000 on reissue and, from the old holder, ?70 per share (?35,000). So the cash shortfall is ?35,000, but the reissue price (?65,000) together with the forfeited amount (?35,000) gives us ?1,00,000.

Here’s the Capital Reserve calculation:

- The amount forfeited per share = ?70

- But amount not required to write off loss on reissue = Share forfeited money – amount required to make up reissue loss

- Loss on reissue per share = ?100 (face value) – ?130 (reissue price) = Wait, the reissue price per share is actually ?65,000/500 = ?130, which means reissued at premium, but this can’t be, since no shares are reissued above face value in such a case, so likely shares were reissued at ?130 each.

But per the data, original paid up per share: ?70. If shares were reissued at ?130 per share, fully paid up, that makes sense.

Amount forfeited: ?35,000

No loss on reissue, as reissued above face value.

- So entire amount forfeited is transferred to Capital Reserve: ?35,000

But that is NOT among the options. Let’s look at the options with your answer:

Option 1: 25,000

Option 2: 30,000

Option 3: 25,200

Option 4: 30,500

Let’s check what happens if you ignore the final call (?10/share), and consider only ?90/share paid.

Original paid: Application + Allotment + First Call = Only Application + Allotment = ?60 (since first call not received). But "non-payment of first call", so only paid upto allotment, that's likely ?60/share.

So, amount paid: 60 x 500 = ?30,000

Company reissues for ?65,000 (so, ?130/share, which is actually above face value).

So, original amount received = ?30,000 (from original holders) + ?65,000 (from new holders) = ?95,000.

Company needs to restore only ?90/share (since final call ?10/share not made): ?90 x 500 = ?45,000 (from original and reissue along).

But the key point: When shares reissued at Rs 130, the forfeited amount is surplus, because shares were reissued at a premium (company gains). Entire amount forfeited (?30,000) is transferred to Capital Reserve.

Here's the thing:

- Original paid-up per share before forfeiture: Application + Allotment = ?60

- Amount forfeited: ?60 x 500 = ?30,000

- Shares reissued at ?130 (fully paid-up), so ?40 premium on ?90 face value (that would be credited to securities premium, but for capital reserve calculation, the full ?60 x 500 is capital reserve).

- Correct answer is option 2: ?30,000

Option 2: ?30,000 is correct.

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