UG Ltd. forfeited 40 shares of Rs 10 each, issued at a discount of 10% for non-payment of a final call of 72 per share. Out of these 10 shares were re-issued as fully paid for Rs 8.50 per share. The Profit on re-issue is-

Rs 280,

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Rs 265,

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Rs 65,

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None of these

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Solution

The correct option is C Rs 65,
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
$F o r f e i t u r e A m o u n t = R s 8$
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
$F o r f e i t u r e A m o u n t = 40 s h a r e s \times R s 8 = R s 320$
$F o r f e i t u r e A m o u n t f o r 10 s h a r e s = 10 s h a r e s \times R s 8 = R s 80$
$F o r f e i t u r e A m o u n t o n r e i s s u e = 10 s h a r e s \times R s 1.50 = R s 15$
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
$P r o f i t o n r e i s s u e = R s 80 - R s 15 = R s 65$
Hence, the profit earned on the reissue of shares is Rs $65$ .

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Similar questions

Q. Z Ltd. forfeited 200 shares of Rs 100 each, issued at 10% premium for non-payment of allotment money of Rs 50 per share (including premium), first call of Rs 40 per share and a second and final call of Rs 10 per share. Out of these 80 shares were re-issued as fully paid-up for Rs 95 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.

Q. MIG Ltd. forfeited 80 shares of Rs 10 each, issued at a discount of 10% for non-payment of first call of Rs 2 per share. The second and final call of Rs 3 per share has not yet been called. Out of these, 20 shares were re-issued as Rs 7 paid-up for Rs 5 per share. The Profit on re-issue is _________.

Q. 1000 shares of Rs 10 each issued at par were forfeited for the non payment of the final call of Rs 2 per share. These shares were re-issued @ Rs 8 per share fully paid up. The Profit on re-issue is _________.

Q. Mother Ltd. forfeited 100 equity shares of Rs 10 each issued at a discount of 10% for nonpayment of first call of Rs 2 per share and the final call of Rs 3 per share on 31st March. 50 forfeited shares were re-issued as fully paid for Rs 8 per share and balance of the shares were re-issued on 30th June at Rs 7 per share. The Profit on re-issue is ________.

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