D and M Ltd. forfeited 5,000 shares of ₹10 each for non-payment of final call of ₹3/- per share. Out of these 2,000 shares were reissued @ ₹12/- per share as fully paid up. What is the maximum discount that can be allowed for re-issue of remaining 3,000 shares?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹21,000
On forfeiture of shares = 5,000 x 7 = 35,000 is received. This amount is forfeited by the company.
Journal entry on forfeiture is as follows-
Share Capital A/c Dr. 50,000 (5,000 x 10) called up amount
To share forfeiture A/c 35,000 (5,000 x 7) received amount
To share final call A/c 15,000 (5,000 x 3) Not received amount
₹35,000 is related to 5,000 shares. 2,000 shares are already reissued at premium so the amount which is available for discount on 3,000 shares is-
5,000 shares = 35,000
3,000 shares = 35,000/5,000 x 3,000
= ₹21,000