Question

X was issued 100 shares of Rs. 10 each at a premium of Rs. 1, he paid application money which in total amounted to. Rs 5 (excluding premium) and failed to balance call money of Rs. 5. Find the maximum discount that can be given at the time of re-issues of shares.

• A. Rs. 2
• B. Rs. 4
• C. Rs. 6
• D. Rs. 5

Answer 1

The correct option is D Rs. 5

Here, X paid application money of Rs 5 per share for 100 shares i.e. Rs 500. The shares were issued at Rs 10 per share and Re 1 Premium per share i.e. Rs 11 per share for 100 shares i.e. Rs 1100. X failed to balance call money of Rs 5 per share which means the shares would be forfeited and reissued. In order to balance the balance amount to be paid by X i.e. Rs 500, the maximum discount per share reissued will be Rs 500/100 i.e. Rs 5 per share.