Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share. The amount was payable as fo

Monjur Alahi

Nitro Paints Ltd. invited applications for issuing 1,60,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share. The amount was payable as follows:
On application-Rs. 6 per share (Including premium Rs. 1),
On allotment-Rs. 3 per share (Including premium Rs. 1 ), and
The balance-on First and Final call.
Applications for 1,80,000 shares were received . Applications for 10,000 shares were rejected and pro rata allotment was made to the remaining applicants. Over payment received on application was adjusted towards sums due on allotment . All calls were made and were duly received except allotment and final call from Aditya who was allotted 3,200 shares. His shares were forfeited . Half of the forfeited shares were reissued for Rs. 43,000 as fully paid-up.
Pass necessary Journal entries for the above transactions in the books of Nitro Paints Ltd.


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Salim Ahmed Kawsar

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Correct Answer - Amount forfeited -Rs. 17,200; Amount transferred to capital Reserve-Rs. 8,600.

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