X applied for 2,000 shares of ₹10 each at a premium of ₹2.50 per share. He was allotted 1000 shares. After having paid ₹3 per share on application, he did not pay the allotment money of ₹4.50 per share (including premium

Answer 2(a) Journal Entries Date Particulars L.F Dr (in ₹) Cr. (In ₹) Share Capital A/c Dr. 7,000 Securities Premium A/c Dr. 1,500 To Forfeited Share A/c 5,000 To Shares Allotment A/c 1,500 To Shares First Call A/c 2,000 (Being 1000 shares forfeited for non-payment of allotment money and first call) Bank A/c Dr. 8,000 Forfeited Shares A/c Dr. 2,000 To Share capital A/c 10,000 (Being 1000 forfeited shares reissued as fully paid-up for ₹8 per share) Forfeited Share A/c Dr. 3,000 To Capital Reserve A/c 3,000 (Being the transfer of gain on reissue) Working Note: Calculation of the amount due but not paid on allotment: Total number of shares: 2000 Total money paid on application (2,000 x ₹3): ₹6000 Excess application money [₹6,000 - (1,000 x ₹3)]: ₹3000 Total amount due on allotment (1,000 x ₹4.50): ₹4500 Amount due but not paid (₹4,500 - ₹3,000): ₹1500 *Out of ₹4,500, ₹2,000 are for Share Capital and ₹2,500 are for Securities Premium. Out of excess application money of ₹3,000, ₹2,000 are adjusted towards allotment as Share Capital and ₹1,000 are adjusted towards allotment as Securities Premium. Therefore, Securities Premium of ₹1,500 (i.e., ₹2,500 - ₹1,000) is not received. Hence, Securities Premium is debited by ₹1,500.