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 ________.

Rs 100

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Rs 80

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Rs 75

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None of these

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Solution

The correct option is C Rs 75
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
$F o r f e i t u r e A m o u n t = 20 s h a r e s \times R s 5 = R s 100$
$F o r f e i t u r e A m o u n t f o r 15 s h a r e s = 15 s h a r e s \times R s 5 = R s 75$
$F o r f e i t u r e A m o u n t o n r e i s s u e = 15 s h a r e s \times R s 0 = R s 0$
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
$P r o f i t o n r e i s s u e = R s 75 - R s 0 = R s 75$
Hence, the profit earned on the reissue of shares is Rs $75$ .
Share forfeiture a/c Dr Rs75
To share capital a/c Rs75.

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Similar questions

Q. N 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 Rs 8 called up for Rs 7 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 ___________.

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 _________.

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.

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.

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