AB Ltd. invited applications for 1,00,000 Equity Shares of Rs. 10 each, payable as Rs. 2 on application, Rs. 3 on allotment and the balance on first and final call. Application were received for 3,00,000 shares and the shares were allotted on a pro rata basis. The excess application money was to be adjusted against allotment only. M, a shareholder, who had applied for 3,000 shares, failed to pay the call money and his shares were accordingly forfeited and reissued @ Rs. 8 per share as fully paid-up.
Pass necessary Journal entries.

Explanation

Working Notes:
1. Number of shares allotted to M `=(1,00,000)/(3,00,000)xx3,000=1,000` shares.
2. Amount transferred to Capital Reserve = Rs. 5,000 - Rs. 2,000 = Rs. 3,000.