Read the following passage and answer the question.

EFG Ltd. invited applications for 10,000 shares of ₹100 each at a premium of 10 each which is payable as follows-
Application - ₹50
Allotment - ₹35 including premium
Call - ₹25
Applications for 15,000 shares is received by the company. The company rejected the applications for 2,500 shares and made pro-rata on the remaining applicants. Mr. A shareholder who is allotted 400 shares failed to pay the allotment and call money due to which the company forfeited his shares and reissued at ₹105 per share.

What will be the journal entry for the reissue of shares?

Bank A/c                   Dr.   ₹42,000
      To Share Capital A/c             ₹40,000
      To Securities Premium A/c     ₹2,000

The correct answer is option 4-
Bank A/c Dr.               ₹42,000
    To Share Capital A/c               ₹40,000
    To Securities Premium A/c     ₹2,000

* Shares are reissued at ₹105 per shares means ₹5 is premium
Shares reissued = 400
Securities premium = 400 x 5
                               = ₹2,000

Total amount comes to business = 400 x 105
                                                   = ₹42,000
Amount goes to share capital = 400 x 100
                                               = ₹40,000

So, the following journal entry is passed for the reissue of shares-
Bank A/c                   Dr.   ₹42,000
      To Share Capital A/c             ₹40,000
      To Securities Premium A/c     ₹2,000