Accounting for share Capital Test

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Accounting for share Capital Test - 55

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Question 1
1 / -0

KMHD Ltd. forfeited 200 shares of Rs 100 each issued on which Rs 50 per share has been called and Rs 6,000 has been paid. The company then re-issued the above mentioned shares to Mr. Singh upon payment of Rs 18,000 credited as fully paid. The profit on re-issue is _________.

A
Rs 6,000

B
Rs 5,000

C
Rs 4,000

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$$Forfeiture\quad Amount=Application\quad Amount$$

Substitute the values in above equation

$$Forfeiture\quad Amount=Rs30$$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$

Substitute the values in the above equation$$Forfeiture\quad Amount=200shares \times Rs30= Rs6000$$

$$Forfeiture\quad amount\quad on\quad reissue=200shares \times Rs10=Rs.2000$$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$

Substitute the values in the above equation

$$Profit\quad on\quad reissue= Rs6000-Rs2000= Rs4000$$

Hence, the profit earned on the reissue of shares is Rs $$4000$$.
Question 2
1 / -0

M Ltd. forfeited 10 shares of Rs 10 each (Rs 6 called up) issued to Y on which he had paid an application money of Rs 2 per share. If 8 of these shares were re-issued as Rs 8 called up for Rs 7.50 per share, the profit on re-issue is-

A
Rs 20

B
Rs 16

C
Rs 12

D
Rs 8

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad $$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs2$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=10shares \times Rs2= Rs20$$
$$Forfeiture\quad Amount\quad for\quad 8shares=8shares \times Rs2=Rs16$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 8shares\quad \times \quad Rs0\quad =\quad Rs0\\ $$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs16-Rs0 = Rs16$$
Hence, the profit earned on the reissue of shares is Rs $$16$$.
Question 3
1 / -0

L Ltd. forfeited 10 shares of Rs 10 each (Rs 6 called up) issued at a discount of 10% to Y on which he had paid an application money of Rs 2 per share. If 8 of these shares were re-issued as Rs 8 called up for Rs 8 per share, the profit on re-issue is-

A
Rs 20,

B
Rs 16,

C
Rs 12,

D
Rs 8,

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad $$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs2$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=10shares \times Rs2= Rs20$$
$$Forfeiture\quad Amount\quad for\quad 8shares=8shares \times Rs2=Rs16$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 8shares\quad \times \quad Rs0\quad =\quad Rs0\\ $$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs16-Rs0 = Rs16$$
Hence, the profit earned on the reissue of shares is Rs $$16$$.
Question 4
1 / -0

National Heavy Chemicals Ltd. issued 5,000 shares of Rs 10 each at a premium of Rs 2 per share for public subscription, payable as Rs 5 on Application and Rs 7 on allotment (including premium). Rajesh who was allotted 200 shares by the Company failed to pay the allotment amount and his shares were forfeited by the Company. 100 out of these forfeited shares were allotted to Brijesh as fully paid up for Rs 8 per share. The profit on re-issue is ____________.

A
Rs 1,000

B
Rs 800

C
Rs 300

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$$Forfeiture\quad Amount=Application\quad Amount$$

Substitute the values in above equation

$$Forfeiture\quad Amount=Rs5$$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$

Substitute the values in the above equation

$$Forfeiture\quad Amount=200shares \times Rs5= Rs1000$$

$$Forfeiture\quad Amount\quad for\quad 100share= 100shares \times Rs5= Rs500$$

$$Forfeiture\quad amount\quad on\quad reissue=100shares \times Rs2=200$$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture-Forfeited\quad amount\quad on\quad reissue$$

Substitute the values in the above equation

$$Profit\quad on\quad reissue= Rs500-Rs200= Rs300$$

Hence, the profit earned on the reissue of shares is Rs $$300$$.
Share Forfeiture a/c Dr. Rs300
To share capital a/ Rs300.
Question 5
1 / -0

J Ltd. forfeited 50 shares of Rs 100 each issued at 10% premium (to be paid at the time of allotment) on which first call of Rs 30 per share was not received, the second & final call of Rs 20 per share was not yet called. If 20 of these shares were re-issued at Rs 50 per share as fully paid-up, the Profit on re-issue is-

A
Rs 2,500,

B
Rs 2,300,

C
Rs 1,500,

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=Rs30\quad +\quad Rs30\quad =\quad Rs60$$
Forfeiture amount is the money received by the company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=50shares \times Rs60= Rs3,000$$
$$Forfeiture\quad Amount\quad for\quad 20shares=20shares \times Rs60=Rs1200$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 20shares\quad \times \quad Rs50\quad =\quad Rs1000\\ $$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs1200-Rs 1000=Rs200$$
Hence, the profit earned on the reissue of shares is Rs $$200$$
Share forfeiture a/c $$Dr. Rs200$$
To capital reserve a/c $$Rs200$$
Question 6
1 / -0

Q Ltd. forfeited 10 shares of Rs 10 each (Rs 6 called up) issued at a discount of 10% to Y on which he had paid an application money of Rs 2 per share. If 8 of these shares were re-issued as fully paid-up Rs 7 per share, the Profit on re-issue is-

A
Rs 20,

B
Rs 16,

C
Rs 12,

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$$Forfeiture\quad Amount=Application\quad Amount$$

Substitute the values in above equation

$$Forfeiture\quad Amount=Rs2$$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$

Substitute the values in the above equation$$Forfeiture\quad Amount=10shares \times Rs2= Rs20$$

$$Forfeiture\quad Amount\quad for\quad 8share= 8shares \times Rs2= Rs16$$

$$Forfeiture\quad amount\quad on\quad reissue=8shares \times Rs2=Rs16$$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$

Substitute the values in the above equation

$$Profit\quad on\quad reissue= Rs16-Rs16= Rs0$$

Hence, the profit earned on the reissue of shares is Rs $$00$$.
Question 7
1 / -0

A limited company forfeited 300 shares of Mr. X who had applied for 500 shares on account of non-payment of allotment money Rs 3 + 2 (premium) and first call Rs 2. Only Rs 3 per share was received with application. Out of these 200 shares were re-issued to Mr. Y as fully paid shares for Rs 8 per share. The profit on re-issue is __________.

A
Rs 1,500

B
Rs 200

C
Rs 600

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs3$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=300 \times3= Rs900$$
$$Forfeiture\quad Amount\quad for\quad 200\quad shares= 200\times 3= Rs600$$.
$$Forfeiture\quad Amount\quad for\quad reissued\quad shares=200\times 2= Rs400$$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture- Forfeited\quad amount\quad on\quad reissue$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs 600- Rs 400= Rs 200$$
Hence, the profit earned on the reissue of shares is Rs $$200$$.
Question 8
1 / -0

Mother Ltd. forfeited 100 equity shares of Rs 10 each issued for nonpayment of first call of Rs 2 per share and the final call of Rs 3 per share on 31st March. 50 forfeited shares were re-issued as fully paid for Rs 8 per share and balance of the shares were re-issued on 30th June at Rs 7 per share. The profit on re-issue is ________.

A
Rs 400

B
Rs 150,

C
Rs 100

D
Rs 250

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs5$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation$$Forfeiture\quad Amount=100shares \times Rs5= Rs500$$
$$Forfeiture\quad amount\quad on\quad reissue=50shares \times Rs2+50shares×Rs3=Rs250$$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue= Rs500-Rs250= Rs250$$
Hence, the profit earned on the reissue of shares is Rs $$250$$.
Question 9
1 / -0

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-

A
Rs 150,

B
Rs 100,

C
Rs 50,

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.

$$Forfeiture\quad Amount=Application\quad Amount$$

Substitute the values in above equation

$$Forfeiture\quad Amount=Rs3$$

Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.

$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$

Substitute the values in the above equation$$Forfeiture\quad Amount=50shares \times Rs3= Rs150$$

$$Forfeiture\quad amount\quad on\quad reissue=50shares \times Rs12=Rs600$$

Profit on the reissue is the profit earned by the company when the forfeited shares are reissued

$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture$$

Substitute the values in the above equation

$$Profit\quad on\quad reissue= Rs150= Rs510$$

Hence, the profit earned on the reissue of shares is Rs $$150$$.
Question 10
1 / -0

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 _________.

A
Rs 7,000

B
Rs 5,000

C
Rs 1,600

D
None of these

Solution

Forfeiture amount per share is the amount to be received by the company on forfeiture of each share.
$$Forfeiture\quad Amount=Application\quad Amount\quad +\quad Allotment\quad Amount$$
Substitute the values in above equation
$$Forfeiture\quad Amount=Rs50$$
Forfeiture amount is the money received by company on forfeiture (cancellation of share) or on the reissue of share.
$$Forfeiture\quad Amount= No.\quad of\quad shares \times Forfeiture\quad Amount$$
Substitute the values in the above equation
$$Forfeiture\quad Amount=100shares \times Rs50= Rs5,000$$
$$Forfeiture\quad Amount\quad for\quad 40shares=40shares \times Rs50=Rs2,000$$
$$Forfeiture\quad Amount\quad on\quad reissue=\quad 40shares\times Rs10\quad = Rs400\\ $$
Profit on the reissue is the profit earned by the company when the forfeited shares are reissued
$$Profit\quad on\quad reissue=Forfeited\quad Amount\quad on\quad forfeiture\quad -\quad Forfeited\quad Amount\quad on\quad Reissue$$
Substitute the values in the above equation
$$Profit\quad on\quad reissue=Rs2,000-Rs400 = Rs1,600$$
Hence, the profit earned on the reissue of shares is Rs $$1,600$$.

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Accounting for share Capital Test - 55

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Accounting for share Capital Test - 55

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SHARING IS CARING

Question 1

Rs 6,000

Rs 5,000

Rs 4,000

None of these

Solution

Question 2

Rs 20

Rs 16

Rs 12

Rs 8

Solution

Question 3

Rs 20,

Rs 16,

Rs 12,

Rs 8,

Solution

Question 4

Rs 1,000

Rs 800

Rs 300

None of these

Solution

Question 5

Rs 2,500,

Rs 2,300,

Rs 1,500,

None of these

Solution

Question 6

Rs 20,

Rs 16,

Rs 12,

None of these

Solution

Question 7

Rs 1,500

Rs 200

Rs 600

None of these

Solution

Question 8

Rs 400

Rs 150,

Rs 100

Rs 250

Solution

Question 9

Rs 150,

Rs 100,

Rs 50,

None of these

Solution

Question 10

Rs 7,000

Rs 5,000

Rs 1,600

None of these

Solution

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