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Question - Accounting Treatment of Forfeiture and Re-issue of Share

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XYZ Ltd. invited applications for 40,000 equity shares of Rs.100 each at a discount of 6%. The amount was payable as follows:

On Application and Allotment - Rs.90 per share

On First and Final call - the balance amount.

Applications for 60,000 shares were received. Applications for 10,000 shares were rejected and shares were allotted on pro-rata basis to remaining applicants. Excess application money received on application and allotment was adjusted towards sums due on first and final call. The calls were made. A shareholder, who applied for 50 share, failed to pay the first and final call money. His shares were forfeited. All the forfeited shares were re-issued at Rs.97 per share fully paid up. Pass necessary journal entries for the above transactions in the books of XYZ Ltd.

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