The directors of N Ltd. resolved that 1,000 equity shares of Rs 10 each, Rs 7.50 called up be forfeited for non-payment of first call of Rs 250. 90% of these shares were re-issued as fully paid for Rs 6 per share. The Profit on re-issue is ________.

Rs 7,500,

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Rs 3,900,

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Rs 900,

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None of these

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Solution

The correct option is C Rs 900,
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
$F o r f e i t u r e A m o u n t = 1000 s h a r e s \times R s 5 = R s 5000$
$F o r f e i t u r e A m o u n t f o r 900 s h a r e s = 900 s h a r e s \times R s 5 = R s 4, 500$
$F o r f e i t u r e A m o u n t o n r e i s s u e = 900 s h a r e s \times R s 4 = R s 3, 600$
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
$P r o f i t o n r e i s s u e = R s 4, 500 - R s 3, 600 = R s 900$
Hence, the profit earned on the reissue of shares is Rs $900$ .
Share forfeiture a/c Dr. Rs900
To share capital a/c Rs900.

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Similar questions

Q. 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 __________.

Q. A limited Company forfeited 100 equity shares of the face value of Rs 10 each, Rs 6 per share called up, for non payment of first call of Rs 2 per share. The forfeited shares were subsequently re-issued as fully paid Rs 7 each. The Profit on re-issue is ________.

Give Journal entries for forfeiture and re-issue of shares:

(i) A Ltd. forfeited 1,000 shares of Rs 10 each, Rs 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non-payment of a first call of Rs 2 per share. Out of these, 600 shares were re-issued as Rs 7 paid up for Rs 4 per share.

(ii) B Ltd. forfeited 1,000 shares of Rs 10 each, Rs 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non-payment of allotment money of Rs 4 per share (including premium) and first call of Rs 2 per share. Out of these, 600 shares were re-issued as fully paid in such a way that Rs 900 were transferred to capital reserve.

(a) Ravi Ltd. forfeited 800 shares of Rs 10 each, Rs 7.50 paid, for non-payment of Final Call of Rs 2.50 per share. Out of these, 600 shares were re-issued as fully paid up in such a way that Rs 2,100 were transferred to capital reserve. Pass necessary journal entries.

(b) X Ltd. forfeited 800 shares of Rs 10 each, Rs 7.50 called-up, for non-payment of Final Call of Rs 2.50 per share. Out of these, 600 shares were re-issued for Rs 6 per share as Rs 7.50 paid up. Pass necessary journal entries.

(c) 400 shares of Rs 10, on which Rs 8 has been called and Rs 6 has been paid, are forfeited. Out of these, 300 are re-issued for Rs 7 as fully paid. Pass necessary journal entries.

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.

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