Question

Apaar Ltd forfeited 4,000 shares of ₹20 each, fully called up, on

which only application money of ₹6 has been paid. Out of these

2,000 shares were reissued and ₹8,000 has been transferred to

capital reserve. Calculate the rate at which these shares were

reissued.​

Answer 1

CONCEPT:

Forfeiture of share is referred to as the situation when the allotted shares are cancelled by issuing company due to non-payment of the subscription amount by the shareholder as decided by the issuing company.

GIVEN:

Apaar Ltd forfeited 4,000 shares of ₹20 each, fully called up, on which only application money of ₹6 has been paid. Out of these 2,000 shares were reissued and ₹8,000 has been transferred to capital reserve.

FIND:

The rate at which these shares were reissued.

SOLUTION:

Number of Forfeited shares re-issued = 2000

Forfeited amount on 4000 shares = 6*4000=24000

Forfeited Amount on 2000 shares = 24000*2000/4000 = 12000

Amount transferred to capital reserve =8000

Discount allowed on reissue = 12000-8000=4000

Share re-issued at 20-2(4000/2000)= rs 18

Therefore, the shares will be reissued at Rs 18

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