Question

400 forfeited shares were reissued at ₹9 per share fully paid-up. Face value of each share was ₹10. What is the amount of discount on reissue?

• A. ₹200
• B. ₹400
• C. ₹800
• D. ₹1,000

Hint:

The maximum discount a company can give on the reissue of forfeited shares is equal to the amount already forfeited on those specific shares.

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
When forfeited shares are reissued at a price lower than their paid-up value, the difference is considered a discount on reissue.

Step 2: Key Formula or Approach:
\[ \text{Total Discount} = \text{Number of Shares Reissued} \times (\text{Paid-up Value} - \text{Reissue Price}) \]

Step 3: Detailed Explanation:
1. Number of shares reissued = 400.
2. Fully paid-up value (Face Value) = ₹10.
3. Reissue price = ₹9 per share.
4. Discount per share = \( 10 - 9 = \text{₹}1 \).
5. Total discount on reissue = \( 400 \times 1 = \text{₹}400 \).

Step 4: Final Answer:
The amount of discount on reissue is ₹400.