Given Information:
- Face value of share = Rs. 10
- Called up amount = Rs. 8
- Forfeited for non-payment = Rs. 5
Finding amount already paid:
Amount paid before forfeiture = Called up amount - Amount not paid
= Rs. 8 - Rs. 5 = Rs. 3
This Rs. 3 represents the amount forfeited (amount already received by the company from the original shareholder).
Rule for reissue of forfeited shares:
The discount on reissue cannot exceed the amount already forfeited.
Maximum discount allowed on reissue = Amount forfeited = Rs. 3
Calculating minimum reissue price:
Minimum reissue price = Face value - Maximum discount allowed
= Rs. 10 - Rs. 3 = Rs. 7
The company can reissue this share at Rs. 7 or any price above it. If reissued at Rs. 7, the entire forfeited amount of Rs. 3 will be transferred to Capital Reserve. If reissued at a higher price (say Rs. 9), only Rs. 1 (10-9) discount is utilized, and Rs. 2 from the forfeited amount goes to Capital Reserve.
Answer: Rs. 7 (Option 4)