Question

A limited forfeited 500 share of 10 each at 20 % premium payment of first call ₹4 per share . share reissue at ₹ 9 per share​

Answer 1

answer

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.Forfeiture Amount= Application Amount+ Allotment Amount

AmountSubstitute the values in above equation

AmountSubstitute the values in above equationForfeiture Amount= Rs 5

5Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

5Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.Forfeiture Amount=No.ofshares×Forfeiture Amount

Amount Substitute the values in the above equation

Amount Substitute the values in the above equationForfeiture Amount=500shares×Rs 5=Rs2500

5=Rs2500ForfeitureAmountfor125shares=125shares×Rs 5=Rs625

5=Rs625Forfeiture Amount on reissue=125shares×Rs 1=Rs125

1=Rs125 Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

1=Rs125 Profit on the reissue is the profit earned by the company when the forfeited shares are reissuedProfiton reissue= Forfeited Amountonforfeiture

AmountonforfeitureSubstitute the values in the above equation

Profiton reissue=Rs625−Rs125=Rs500