Question

Raghav Ltd. forfeited 100 shares of rupee 10 each issued at a premium of 20% for non-payment of first call of rupee 3 per share and final call of rupee 1 per share. The minimum price per share at which these shares can be reissued will be:

• A. rupee 4
• B. rupee 6
• C. rupee 8
• D. rupee 10

Hint:

The minimum reissue price of forfeited shares is determined by subtracting the maximum allowable discount (forfeited amount) from the face value.

Answer 1

The Correct Option is A

1. Face value per share: rupee 10. 2. Premium on issue: rupee 2. 3. Total amount payable per share (Face Value + Premium) \[ = rupee 10 + rupee 2 = rupee 12 \]. 4. Total unpaid amount per share \[ = rupee 3 { (First Call)} + rupee 1 { (Final Call)} = rupee 4 \]. 5. Forfeited amount per share \[ = {Total Due} - {Unpaid Amount} = rupee 12 - rupee 4 = rupee 8 \]. 6. Minimum reissue price per share:
- Forfeited shares must be reissued at a price no less than the forfeited amount per share. 
- The maximum allowable discount on reissue is equal to the forfeited amount, which is rupee 8. 
- Minimum reissue price per share: \[ = {Face Value} - {Maximum Discount} = rupee 10 - rupee 6 = rupee 4 \]. Therefore, the minimum reissue price for these shares is rupee 4 (Option A).