Ratan Ltd. forfeited 5,000 shares of Rs. 10 each on which application money of Rs. 3 was received.
Out of these 2,500 shares were reissued as fully paid-up and Rs. 5,000 has been transferred to
Capital Reserve. Calculate the rate at which these shares were reissued
Answers
Answer:
Rs 500,
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=Rs5
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=500shares×Rs5=Rs2500
ForfeitureAmountfor125shares=125shares×Rs5=Rs625
ForfeitureAmountonreissue=125shares×Rs1=Rs125
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=Rs625−Rs125=Rs500
Hence, the profit earned on the reissue of shares is Rs 500.
The rate at which 2,500 shares were re-issued is @9 per share.
Explanation:
Share Capital A/c Dr.50,000
To Share Forfeiture A/c 15,000
To Call-in Arrears A/c 35,000
Bank A/c Dr. 22,500
Loss on Re-Issue 2,500
To Share Capital A/c 25,000
Share Forfeiture A/c Dr.5,000
To Capital Reserve A/c 5,000
# ( only the re-issued shares):
•Transferred to Capital Reserve = Share Forfeiture - Loss on Reissue
•5,000 = 7,500 (2,500X3) - Loss on Reissue
•Loss on Re-Issue = 7,500-5,000
•Loss on Re-Issue =2,500