Treatment of security premium on re-issue of forfieted share

Mandeep Singh (student) (24 Points)

23 January 2013  

X Ltd. forfieted 5 shares of rs 10 each issued at 10% premium to sham (rs 9 called up) on which he did not pay allotment (including premium) of rs 3 and first call of rs 2. Out of these 3 shares were re-issued to Ram as fully called up for rs 8 per share.

Can anybody explian me the logic of security premium credited in Re-issue

Bank Account                (3 * Rs 8)                                       Dr     24

Forfieted shares account                                                    Dr     9

               To  Share capital account (3 * Rs 10)                                          30

               To  Security premium account (3 * Rs 1)                                       3