Jupiter Company ltd issued 35,000 equity shares of Rs. 10 each at a premium
of Rs. 2 payable as follows;
On application Rs 3
On allotment Rs 5 (including premium)
Balance on first & final call
The issue was fully subscribed. All the money was duly received.
Record journal entries in the books of the company.
Answers
Correct option is
D
Rs 400,
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=Rs30
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=50shares×Rs30=Rs1,500
ForfeitureAmountfor20share=20shares×Rs30=Rs600
Forfeitureamountonreissue=20shares×Rs10=200
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=Rs600−Rs200=Rs400
Hence, the profit earned on the reissue of shares is Rs 400.
Share Forfeiture a/c Dr. Rs400
To capital reserve a/c Rs400