A limited company forfeited 1,000 equity shares of Rs. 10 each, issued at a discount of 10 percent, for non-payment of first call of Rs. 2 and second call of Rs, 3 per share. These shares were reissued to Kamal upon payment of Rs. 7,000 credited as fully paid. The company maintains calls-in-arrears account. Record journal entries in the books of the company relating to forfeiture of 1,000 shares and their reissue.
Answers
Answer:
Rs 6000
Explanation:
Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
ForfeitureAmount=ApplicationAmount+AllotmentAmount
Substitute the values in above equation
ForfeitureAmount=Rs8
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 equation
ForfeitureAmount=1000shares×Rs8=Rs8,000
Forfeitureamountonreissue=1000sahres×Rs2=Rs2,000
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
Profitonreissue=ForfeitedAmountonforfeiture+ForfeitedAmountonreissue
Substitute the values in the above equation
Profitonreissue=Rs8,000−Rs2,000=Rs6,000
Hence, the profit n reissue is Rs 6,000.