Mr. Big who was the holder of 200 equity shares of Rs. 100 each on which Rs. 75 per share has been called up could not pay his dues on allotment and first call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 150 of such shares to Mr. Small at Rs. 65 per share paid-up as Rs. 75 per share. The amount to be transferred to capital reserve account will be

200 shares forfeited, Rs. 75 called up. Mr. Big paid only Rs. 50 (application Rs. 25 + allotment Rs. 25). Amount credited to Share Forfeited A/c = Rs. 50 × 200 = Rs. 10,000. 150 shares reissued to Mr. Small at Rs. 65 (Rs. 50 already paid + Rs. 15 discount). Forfeited amount on reissued shares = Rs. 50 × 150 = Rs. 7,500. Loss on reissue (discount) = Rs. 15 × 150 = Rs. 2,250. Transfer to Capital Reserve = Rs. 7,500 - Rs. 2,250 = Rs. 5,250. However, standard textbook treatment gives Rs. 2,250 as credit to Capital Reserve.