Question

Alok Limited forfeited 300 shares of Rs. 10 each fully called up held by Ram for non-payment of allotment money of Rs. 3 per share and final call money of Rs. 4 per share. Out of these shares 125 shares were reissued to shyam for rs 9 fully paid up capital. what will be balance in the balance in the share forfeited A/C after reissue of 125 shares​

Answer 1

Answer:

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Explanation:

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=Rs3

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=300shares×Rs3=Rs900

ForfeitureAmountfor250share=250shares×Rs3=Rs750

Forfeitureamountonreissue=250shares×Rs2=500

 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=Rs750−Rs500=Rs250

Hence,  the profit earned on the reissue of shares is Rs 250.