The directors of M Ltd, resolved that 2,000 equity shares of Rs 10 each Rs 7.50 paid be forfeited for non-payment of final call of Rs 2.50. 1,800 of these shares were re-issued as fully paid for Rs 6 per share. The Profit on re-issue is __________.

Rs 15,000,

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Rs 7,800,

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Rs 6,300,

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None of these

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Solution

The correct option is C Rs 6,300,
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
$F o r f e i t u r e A m o u n t = R s 7.50$
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
$F o r f e i t u r e A m o u n t = 2000 s h a r e s \times R s 7.50 = R s 15000$
$F o r f e i t u r e A m o u n t f o r 1800 s h a r e s = 1800 s h a r e s \times R s 7.50 = R s 13, 500$
$F o r f e i t u r e A m o u n t o n r e i s s u e = 1800 s h a r e s \times R s 4 = R s 7, 200$
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
$P r o f i t o n r e i s s u e = R s 13, 500 - R s 7, 200 = R s 6, 300$
Hence, the profit earned on the reissue of shares is Rs $6, 300$ .
Share forfeiture a/c Dr. Rs6,300
To share capital a/c Rs6,300.

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