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Question
Sarita Ltd. forfeited 100 shares of ₹ 10 each, ₹ 8 called up issued at a premium of ₹ 2 per share to Ramesh for nonpayment of allotment money of ₹ 5 per share (including premium). The first and final call of ₹ 2 per share was not made. Out of these 70 shares were reissued to Ashok as ₹ 8 called up for ₹ 10 per share. The gain on reissue will be ______.
Options
₹ 500
₹ 400
₹ 350
₹ 300
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Solution
Sarita Ltd. forfeited 100 shares of ₹ 10 each, ₹ 8 called up issued at a premium of ₹ 2 per share to Ramesh for nonpayment of allotment money of ₹ 5 per share (including premium). The first and final call of ₹ 2 per share was not made. Out of these 70 shares were reissued to Ashok as ₹ 8 called up for ₹ 10 per share. The gain on reissue will be ₹ 350.
Explanation:
Credit balance of share forfeiture = Amount received on forfeiture of shares
= ₹ 5 × 100 (shares)
= ₹ 500
Credit balance of share forfeiture for 70 shares
= `(500 × 70)/100`
= ₹ 350
Discount on reissue of shares = Nil
Gain on reissue = ₹ 350 − Nil
= ₹ 350
