Luxury Cars Ltd. invited applications for issuing 10,000 equity shares of Rs. 50 each at a premium of Rs. 100 per share. The amount was payable as follows :
On application - Rs. 75 per share (including Rs. 50 premium)
On allotment - The balance
The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares were forfeited. The forfwited shares were later on re-issued for Rs. 9 per share as fully paid up. Pass necessary journal entries for the above transactions in the books of the company.

Explanation

Amount received on Application Rs. 7,80,000, On Allotment Rs. 6,97,500, Capital Reserve Rs. 7,500.