Daisy Limited forfeited 200 shares 1 10 each who had applied for 500 shares, issued at a premium of 10% for non-payment of final call of 1 3 per share. Out of these, 100 shares were issued as fully paid up for rupees 15. The profit on reissue is:
Answers
Answer:
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=Rs10
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=200shares×Rs10=Rs2,000
ForfeitureAmountfor80shares=80shares×Rs10=Rs800
ForfeitureAmountonreissue=80shares×Rs5=Rs400
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=Rs800−Rs400=Rs400
Hence, the profit earned on the reissue of shares is Rs 400.
Share forfeiture a/c Dr. Rs400
To share capital a/c Rs400.