450 shares of Rs. 100 each at the market price of Rs 30.80 (question of shares and dividends)
Answers
ANSWER
Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
ForfeitureAmount=ApplicationAmount
Substitute the values in above equation
ForfeitureAmount=Rs50
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
ForfeitureAmount=No.ofshares×ForfeitureAmount
Substitute the values in the above equationForfeitureAmount=100shares×Rs50=Rs5000
Forfeitureamountonreissue=100shares×Rs10=1000
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
Profitonreissue=ForfeitedAmountonforfeiture
Substitute the values in the above equation
Profitonreissue=Rs5000−Rs1000=Rs4000
Hence, the profit earned on the reissue of shares is Rs 4000.
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