X Ltd forfeited 10 shares of Rs 10 each, Rs 8 called, for the non payment of Rs 1 first call and Rs second call. These shares were reissued at Rs 8 per share. Pass necessary entries.
Answers
ANSWER
HEY MATE , THATS YOUR ANSWER.
Explanation:
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=100shares×Rs5=Rs500
ForfeitureAmountfor70shares=70shares×Rs5=Rs350
ForfeitureAmountonreissue=7shares×Rs0=Rs0
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=Rs350−Rs0=Rs350
Hence, the profit earned on the reissue of shares is Rs 350.
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