(Forfeiture of Shares which were Issued at Premium-Premium not received).
Sargam Ltd. invited applications for issuing 80,000 equity shares of Rs. 100 each at a premium. The amount was payable as follows :
On Application- Rs. 20 per share,
On Allotment-Rs. 60 (including premium ) per share,
On First and Final Call-Rs. 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 Rs. 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.

Explanation

Working Notes:
1 . Calculation of allotment money not paid by sitaram:
(a) Calculation of number of shares allotted to Sitaram `=(80,000)/(1,20,000)xx6,000=4,000` shares.
`{:("(b)","Calculation of allotment money not paid by Sitaram:",," Rs."),(,"Amount due on allotment (4,000 shares"xx"Rs.60 per share)",,"2,40,000"),(,"Less: Excess Application Money adjusted on allotment [ ( 6,000-4,000)"xx"Rs.20]",," 40,000"),(,"Amount not paid on allotment",,barul(ul(2,00,000))),(,,,),(,,,):}`
`{:(2.,"Calculation of total amount received on allotment:",," Rs."),(,"Total allotment money due",,"48,00,000"),(,"Less: Excess application money adjusted on allotment",," 8,00,000"),(,,,bar(40,00,000) ),(,"Less: Allotment money not paid by Sitaram (WN 1)",," 2,00,000"),(,"Amount received on allotment",,barul(ul(38,00,000))):}`
3. In the given case 4,200 shares (including all the forfeited shares of Harnam) are reissued at par. So, the entire amount forfeited on such shares, i.e., Rs. 1,50,000 [Rs. 1,02,000 (i.e.,1,02,000(i.e., Rs. 1,20,000 `xx` 3,400/4,000) of Sitaram's shares + Rs. 48,000 Harnam's shares] will be transferred to Capital Reserve.