Question

x limited forfeiture 5000 shares of rs.100 each (issue at a premium of rs.20) for non payment of allotment of rs 50 and first and final call rs.10 premimum is called at the time of alotment pass entry a) when all shares re issue at 70 fully paid up​

Answer 1

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=Rs50

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=100shares×Rs50=Rs5,000

ForfeitureAmountfor40shares=40shares×Rs50=Rs2,000

ForfeitureAmountonreissue=40shares×Rs10=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=Rs2,000−Rs400=Rs1,600

Hence, the profit earned on the reissue of shares is Rs 1,600.