Question

Sarita Ltd. forfeited 100 shares of rupee 10 each, rupee 8 called up issued at a premium of rupee 2 per share to Ramesh for non-payment of allotment money of rupee 5 per share (including premium). The first and final call of rupee 2 per share was not made. Out of these, 70 shares were reissued to Ashok as rupee 8 called up for rupee 10 per share. The gain on reissue will be:

• A. rupee 500
• B. rupee 400
• C. rupee 350
• D. rupee 300

Hint:

In share forfeiture, the gain on reissue is calculated as the difference between the amount received on reissue and the amount due on the forfeited shares, plus any forfeited amount retained.

Answer 1

The Correct Option is C

1. Proceeds from reissue of 70 shares: 70 shares \* ₹10/share = ₹700.

2. Total amount originally called up for 70 shares: 70 shares \* ₹8/share = ₹560.

3. Gain realized on reissue: Reissue Proceeds - Called-up Amount = ₹700 - ₹560 = ₹140.

4. Forfeited amount per share prior to reissue: - Amount called up per share (excluding final call): ₹8. - Amount paid by Ramesh per share: ₹3 (Application Money). - Amount unpaid by Ramesh per share: ₹5 (Allotment Money). - Premium of ₹2 included in allotment was not received and thus not subject to forfeiture. - Amount forfeited per share: ₹3. - Total forfeited amount for 70 shares: 70 shares \* ₹3/share = ₹210.

5. Total Gain on Reissue: Gain on Reissue + Total Forfeited Amount = ₹140 + ₹210 = ₹350. Therefore, the correct answer is ₹350 (Option C).