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. Total amount received on reissue of 70 shares \[ = 70 \times rupee 10 = rupee 700 \] 

2. Total amount originally called up before reissue \[ = 70 \times rupee 8 = rupee 560 \] 

3. Gain on reissue calculation \[ \text{Gain on Reissue} = \text{Reissue Amount} - \text{Called-up Amount} \] \[ = rupee 700 - rupee 560 = rupee 140 \] 

4. Forfeited amount per share before reissue The amount forfeited per share: 
- Total amount called up = rupee 8 (excluding final call) 
- Paid by Ramesh = Application Money (rupee 3) 
- Unpaid by Ramesh = Allotment Money (rupee 5) 
- Premium amount (rupee 2) was included in allotment but not received (hence not part of forfeiture balance) 
- Amount forfeited per share = rupee3 
- Total forfeited amount for 70 shares = \( 70 \times 3 = rupee 210 \) 

5. Final Gain on Reissue \[ \text{Total Gain} = \text{Reissue Gain} + \text{Forfeited Amount} \] \[ = rupee 140 + rupee 210 = rupee 350 \] Thus, the correct answer is rupee350 (Option C).