Shares

1. Inviting applications from investors: Initially, a company invites applications from interested investors for purchasing shares. This is the starting step where potential shareholders are asked to express their interest by submitting applications.
2. Application money received: After inviting applications, the company receives application money from the interested investors, confirming their intention to buy shares.
3. Allotment Due: Next, the company communicates the share allotment to the investors. This includes calculating the amount due for the share allotment above the application money already paid.
4. Allotment money received: Investors then pay the due amount following the allotment notice issued by the company. This payment completes the share allotment process on the financial end.
5. Share Call Money Due: Finally, if there are any remaining calls on the shares, such as additional payments required by the company for share capital, these amounts become due.

In the absence of any specific information or agreement between the partners, the retiring or deceased partner's share of profit will be acquired by the remaining partners in the Old Profit Sharing Ratio. This means the remaining partners will divide the share based on the ratio that was in place before the partner’s retirement or death.

Old Profit Sharing Ratio refers to the ratio in which the partners shared the profits and losses of the business before the retirement or death of the partner.

Therefore, the correct answer is (B): Old Profit Sharing Ratio.

The balance in the Share Forfeited Account when forfeited shares are reissued is treated as a Capital Profit.

This situation occurs because the Share Forfeited Account represents the amounts that were paid by shareholders on the shares that they initially forfeited due to non-payment of all calls. When these shares are reissued, part or all of the forfeited amount is transferred to the Capital Reserve, as it is not a recurring income but rather a one-time gain related to the capital structure of the company.

Here’s a step-by-step explanation:

1. Forfeiture of Shares: When a shareholder fails to pay a call, the shares may be forfeited. The amount received on these shares up to the date of forfeiture is recorded in the Share Forfeited Account.
2. Reissue of Shares: These forfeited shares can later be reissued to new shareholders. The new issue price may be less than, equal to, or more than the original issue price.
3. Balance Treatment: If the reissued price is less than the original paid-up value, the difference is adjusted against the balance in the Share Forfeited Account. Any remaining balance in the Share Forfeited Account after such adjustments is considered a capital gain.
4. Final Accounting Treatment: This balance, as it is derived from the capital transaction of issuing shares, qualifies as Capital Profit and is transferred to the Capital Reserve Account. This ensures that it is not distributed as dividends but may be used for writing off capital losses.

Therefore, the correct option is Capital Profit.

• Calculate the Issue Price per Share:
  • Face value of each share = ₹10
  • Premium on each share = 20% of ₹10 = ₹2
  • Total issue price per share = ₹10 + ₹2 = ₹12
• Understand the Final Call Scenario:
  • Final call not received on 100 shares.
  • Final call amount per share = ₹3
  • Total final call amount not received = 100 shares × ₹3 = ₹300
• Forfeiture Amount Calculation:
  • Forfeiture is the amount of money received on the shares that are being forfeited excluding calls that were not received.
  • Total amount paid per forfeited share (excluding final call) = Total issue price - Final call = ₹12 - ₹3 = ₹9
  • Total forfeiture amount = 100 shares × ₹9 = ₹900