Eee Ltd. forfeited 200 shares of Rs 10 each (Rs 8 called up) on which the holder had paid application and allotment money of Rs 5 per share. Out of these 50 shares were re-issued to F as fully paid for Rs 8 per share. The Profit on re-issue is ___________.

Rs 1000

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Rs 900

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Rs 150

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None of these

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Solution

The correct option is C Rs 150
Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$F o r f e i t u r e A m o u n t = A p p l i c a t i o n A m o u n t + A l l o t m e n t A m o u n t$
Substitute the values in above equation
$F o r f e i t u r e A m o u n t = R s 5$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$F o r f e i t u r e A m o u n t = N o . o f s h a r e s \times F o r f e i t u r e A m o u n t$
Substitute the values in the above equation
$F o r f e i t u r e A m o u n t = 200 s h a r e s \times R s 5 = R s 1, 000$
$F o r f e i t u r e A m o u n t o n 50 s h a r e s = 50 s h a r e s \times R s 5 = R s 150$
$F o r f e i t u r e a m o u n t o n r e i s s u e = 50 s h a r e s \times R s 0 = R s 0$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$P r o f i t o n r e i s s u e = F o r f e i t e d A m o u n t o n f o r f e i t u r e - F o r f e i t e d A m o u n t o n r e i s s u e$
Substitute the values in the above equation
$P r o f i t o n r e i s s u e = R s 150 - R s 0 = R s 150$
Hence, the profit on the reissue of shares is Rs $150$ .

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