Question

Ajay Ltd. forfeited 100 shares of Rs 10 each for non-payment of first call of Rs 1 per share and second and final call of Rs 3 per share. The minimum price per share at which these shares can be reissued will be :

• A. Rs 6
• B. Rs 4
• C. Rs 10
• D. Rs 16

Hint:

The minimum reissue price ensures the company receives at least the share's called-up value in total (original amount paid + reissue price). It equals Called-up Value minus Amount Forfeited per share. Max discount equals amount forfeited.

Answer 1

The Correct Option is B

Step 1: Calculate Amount Forfeited per Share:
Face Value: Rs 10.
Amount Unpaid: First Call (Rs 1) + Final Call (Rs 3) = Rs 4 per share.
Amount Forfeited per Share = Face Value - Amount Unpaid
Amount Forfeited = Rs 10 - Rs 4 = Rs 6 per share.
Step 2: Determine Maximum Allowable Discount on Reissue:
The maximum discount for reissue equals the amount forfeited per share.
Maximum Discount = Rs 6 per share.
Step 3: Calculate Minimum Reissue Price:
Minimum Reissue Price = Face Value - Maximum Allowable Discount
Minimum Reissue Price = Rs 10 - Rs 6 = Rs 4 per share.
Conclusion:
The minimum reissue price per share is Rs 4.