A limited company issued a prospectus inviting applications for 2,00,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as follows : On Application Rs. 3, On Allotment Rs. 4 (including premium) : On First Call Rs. 3 and On Second Call Rs. 2.
Applications were received for 3,00,000 shares and allotment was made on pro-rata basis. Money overpaid on applications was employed on account of sums due on allotment.
R, to whom 400 shares were allotted failded to pay the allotment money and on his subsequent failure to pay the First Call his shares were forfeited. M, the holder of 600 shares failed to pay the two calls and his shares were forfeited after the Second Call. Of the shares forfeited, 800 shares were sold to K as fully paid, K paying Rs. 9 per share, the whole of R's share being included.
Give journal entries, prepare Bank Account and show how the Share Capital will be shown in the Company's Balance Sheet.

Explanation