Q Ltd. forfeited 10 shares of Rs 10 each (Rs 6 called up) issued at a discount of 10% to Y on which he had paid an application money of Rs 2 per share. If 8 of these shares were re-issued as fully paid-up Rs 7 per share, the Profit on re-issue is-

Rs 20,

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Rs 16,

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Rs 12,

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None of these

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Solution

The correct option is B None of these
Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$F o r f e i t u r e A m o u n t = A p p l i c a t i o n A m o u n t$

Substitute the values in above equation

$F o r f e i t u r e A m o u n t = R s 2$

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 $F o r f e i t u r e A m o u n t = 10 s h a r e s \times R s 2 = R s 20$

$F o r f e i t u r e A m o u n t f o r 8 s h a r e = 8 s h a r e s \times R s 2 = R s 16$

$F o r f e i t u r e a m o u n t o n r e i s s u e = 8 s h a r e s \times R s 2 = R s 16$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$P r o f i t o n r e i s s u e = F o r f e i t e d A m o u n t o n f o r f e i t u r e$

Substitute the values in the above equation

$P r o f i t o n r e i s s u e = R s 16 - R s 16 = R s 0$

Hence, the profit earned on the reissue of shares is Rs $00$ .

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Similar questions

Q. MIG Ltd, forfeited 10 shares of Rs 10 each (Rs 6 called up) issued at a discount of 10% to Mr. Y on which he had paid an application money of Rs 2 per share. Out of these, 8 shares were re-issued to Z as Rs 8 called up for Rs 9 per share. The Profit on re-issue is _________.

Q. X Ltd, forfeited 20 shares of Rs 10 each, Rs 7 called up on which Mahesh had paid application and allotment money of Rs 5 per share. Of these 15 shares were re-issued to Naresh as Rs 7 paid-up for Rs 8 per share. The Profit on re-issue is ________.

Q. 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 ___________.

Pass journal entries for the forfeiture and re-issue in the following cases:

(i) A Ltd. forfeited 400 shares of Anil of Rs 10 each fully called up for non-payment of final call of Rs 2 per share and re-issued to Sunil as fully paid for Rs 10 per share.

(ii) B Ltd. forfeited 500 shares of Rs 10 each fully called up for non-payment of first call of Rs 2 per share and final call of Rs 2 per share. All of these shares were re-issued as fully paid for Rs 8 per share.

(iii) C Ltd.forfeited 600 shares of Rs 10 each fully called up for non-payment of allotment money of Rs 3 per share,first call of Rs 2 share and final call Rs 2 per share. 400 of these shares were re-issued as fully paid up at the maximum rate of discount allowed by law.

(iv) D Ltd. forfeited 800 shares of Rs 10 each fully called up, on which the holder had paid only the application money of Rs 3 per share. Out of these, 500 shares were re-issued at Rs 11 per share, fully paid up.

Pass journal entries for the Forfeiture and Re-issue in the following cases:

(a) X Ltd. forfeited 200 shares of Ravi of Rs 10 each Rs 8 called up, on which he had paid application and allotment money of Rs 3 per share. Out of these, 100 shares were re-issued as fully paid up for Rs 8 per share.

(b) Y Ltd. forfeited 300 shares of Rs 10 each, Rs 7 called up, for non-payment of First Call of Rs 2 per share. Out of these, 100 shares were immediately re-issued at Rs 6 per share.

(c) Z Ltd. forfeited 600 shares of Rs 10 each, on which first call of Rs 3 per share was not received; the second and final call of Rs 2 per share has not yet been called. Out of these, 200 shares were re-issued as Rs 8 paid-up for Rs 7 per share.

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