Sargam Ltd. invited applications for issuing 80,000 Equity shares of ₹ 100 each at a premium. The amount was payable as follows:
₹ 20 per share
₹ 60 (including premium) per share,
On First and Final Call
₹ 40 per share
Applications for 1,20,000 shares were received. Allotment was made on pro-rata basis to all the applicants. Excess money received on applications was adjusted on sums due on allotment. Sitaram, who had applied for 6,000 shares, failed to pay the allotment money and Harnam did not pay first and final call on 800 shares allotted to him. The shares of Sitaram and Harnam were forfeited, 4,200 of these shares were reissued for ₹ 100 per share as fully paid-up. The reissued shares included all the forfeited shares of Harnam.
Pass necessary Journal entries for the above transactions in the books of Sargam Ltd.
[Ans.: Capital Reserve – ₹ 1,50,000.]