X limited forfeited 100 shares (Rs 6 called up) issued at a discount of 10% to Mahesh on which he had paid Rs 2 per share. Out of these 80 shares were reissued at Rs 6 per share to Suresh, Rs 8 paid up. The Profit on re-issue is __________.
Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
ForfeitureAmount=ApplicationAmount+Discount
Substitute the values in above equation
ForfeitureAmount=Rs3
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
ForfeitureAmount=No.ofshares×ForfeitureAmount
Substitute the values in the above equationForfeitureAmount=100shares×Rs3=Rs300
ForfeitureAmountfor80share=80shares×Rs3=Rs240
Forfeitureamountonreissue=80shares×Rs2=Rs160
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
Profitonreissue=ForfeitedAmountonforfeiture
Substitute the values in the above equation
Profitonreissue=Rs240−Rs160=Rs80
Hence, the profit earned on the reissue of shares is Rs 80.