Question

Ajay Ltd. forfeited 100 shares of Rs 10 each for non-payment of first call of Rs 1 per share and second and final call of Rs 3 per share. The minimum price per share at which these shares can be reissued will be:

• A. Rs 6
• B. Rs 4
• C. Rs 10
• D. Rs 16

Hint:

The minimum reissue price for a forfeited share (reissued as fully paid) is the face value minus the amount forfeited per share. It's also equal to the amount that was unpaid on that share at the time of forfeiture.

Answer 1

The Correct Option is B

The face value per share is Rs 10.
The amount unpaid per share = First Call (Rs 1) + Second \& Final Call (Rs 3) = Rs 4.
The amount paid per share (Amount Forfeited) = Face Value - Amount Unpaid \[ \text{Amount Forfeited per share} = Rs 10 - Rs 4 = Rs 6. \] When forfeited shares are reissued (assumed to be fully paid-up unless specified otherwise), the company must receive at least the amount that was unpaid on the shares. The maximum discount allowed on reissue is the amount forfeited per share.
Minimum Reissue Price:
\[ \text{Minimum Reissue Price} \] \[ = \text{Face Value (or Called-up Value if not fully called)} - \text{Maximum Allowable Discount} \] \[ \text{Minimum Reissue Price} = Rs 10 - Rs 6 = Rs 4. \] Alternatively, the minimum reissue price must cover the unpaid amount on the share: \[ \text{Minimum Reissue Price} = \text{Amount Unpaid per share} = Rs 4. \] Therefore, the company must receive at least Rs 4 per share upon reissue to ensure the full face value (Rs 10) is eventually received (Rs 6 already paid + Rs 4 minimum reissue price).