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 __________.

Rs 2,000

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Rs 1,600

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Rs 400

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

None of these

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C Rs 400
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
$F o r f e i t u r e A m o u n t = R s 10$
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
$F o r f e i t u r e A m o u n t = 200 s h a r e s \times R s 10 = R s 2, 000$
$F o r f e i t u r e A m o u n t f o r 80 s h a r e s = 80 s h a r e s \times R s 10 = R s 800$
$F o r f e i t u r e A m o u n t o n r e i s s u e = 80 s h a r e s \times R s 5 = R s 400$
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
$P r o f i t o n r e i s s u e = R s 800 - R s 400 = R s 400$
Hence, the profit earned on the reissue of shares is Rs $400$ .
Share forfeiture a/c Dr. Rs400
To share capital a/c Rs400.

Suggest Corrections

Similar questions

Q. 50 shares of Rs 10 each issued at a premium of Rs 5 each payable with allotment were forfeited for the non payment of allotment money of Rs 9 per share including premium. The first and final call on these shares at Rs 3 per share were not made. The forfeited shares were re-issued @ Rs 12 per share fully paid up. The profit on re-issue is-

Q. A Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium on which allotment money of Rs 30 per share (including premium) and first call of Rs 30 per share were not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued as Rs 80 paid-up for Rs 90 per share, the Profit on re-issue is ____________.

Q. Journalise the following transaction in the books Bhushan Oil Ltd
(a) 200 shares of Rs. 100 each issued at a premium of Rs. 10 were forfeited for the non-payment of allotment money of Rs. 60 per share. The first and final call of Rs. 20 per share on these shares were not made. The forfeited shares were reissued at Rs. 70 per share as fully paid-up.
(b) 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment were forfeited for non-payment of allotment money of Rs. 8 per share including premium. The first and final call of Rs. 4 per share were not made. The forfeited share were reissued at Rs. 15 per share fully paid-up.
(c) 400 share of Rs. 50 each issued at par were forfeited for non-payment of final call of Rs. 10 per share. These share were reissued at Rs. 45 per share fully paid-up.

Q. Y Ltd, forfeited 100 shares of Rs 100 each issued at 20% premium (to be paid at the time of allotment) for non-payment of a first call of Rs 30 per share and a second & final call of Rs 20 per share. Out of these 40 shares were re-issued as fully paid-up for Rs 90 per share. 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.

Join BYJU'S Learning Program