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    Issue of Shares

    Uploaded by

    Raj Singh
    Journal entries for issue of shares

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Issue of Shares

    Uploaded by

    Raj Singh
    3 views3 pages
    Journal entries for issue of shares

    Copyright

    © © All Rights Reserved

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    DOCX, PDF, TXT or read online from Scribd

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    Journal entries for issue of shares

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3 views3 pages

    Issue of Shares

    Uploaded by

    Raj Singh
    Journal entries for issue of shares

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    ISSUE OF SHARES

    When a company issues shares, it is usually been done by taking the money from the shareholders in installments.
    When a company floats its shares for subscription by the general public, the interested investors first need to apply
    for the shares by paying the requisite amount of application money. So the first installment is known as share
    application money. Subsequently the company allots the shares to applicants and makes the second install due,
    which is known as share allotment money. The installments thereafter are known as call money (first call/second
    call) and the last installment is known as final call money.

    Shares may be issued at a price which is expressed as


    (a) At par: Issue price and the actual price (face value) of the shares are same.
    (b) At a premium: Issue price is higher than the actual price (face value)

    Journal entries for issue of shares


    Particulars Debit (Rs) Credit (Rs)
    For collection of application money.
    Bank a/c
    To Share Application a/c
    Transfer of application money to share capital.
    Share Application a/c
    To Share Capital a/c

    If there is excess application received, it can be dealt in two ways


    (a) Refund
    Share Application a/c
    To Bank a/c

    (b) Pro-rata allotment (i.e. the shares are allotted proportionately and the
    excess money received in application is utilized toward the money due in
    subsequent installments.
    Share Application a/c
    To Share Allotment a/c
    To Share call a/c (if needed)
    For allotment money due
    (a) At par
    Share Allotment a/c
    To Share Capital a/c

    (b) At a premium
    Share Allotment a/c
    To Share Capital a/c
    To Securities Premium a/c

    1 S.A. CLASSES Ph: 9874484733


    (Accounts &Commerce Tuition)
    For allotment money received
    Bank a/c
    To Share Allotment a/c
    Or
    If any shareholder fails to pay the money due on allotment, it is known as
    calls in arrear. In such a case the entry for application money received will
    be
    Bank a/c
    Calls in arrear a/c
    To Share Allotment a/c
    For call money due
    Share first/second/final call a/c
    To Share Capital a/c
    For call money received
    Bank a/c
    Share first/second/final call a/c
    Or
    If there is calls in arrear
    Bank a/c
    Calls in arrear a/c
    Share first/second/final call a/c
    For when a certain shareholder pays his subsequent installment money
    along with his current installment, it is known as call in advance. The entry
    in that case will be
    Bank a/c
    To Calls in advance a/c
    And subsequently when the install for which advance has been paid falls
    due, the entry is
    Calls in advance a/c
    To Share first/second/final call a/c
    The shares for which there has been a default in payment, the directors can
    forfeit them.
    The entry for forfeiture is
    (a) for shares initially issued at par
    Share capital a/c Called up value
    To Calls in arrear a/c Amt. unpaid
    To Share forfeiture a/c Amt. paid

    (b) for shares initially issued at a premium


    Share capital a/c (Excluding Premium) Called up value
    Securities premium a/c (only if premium remains unpaid) Premium
    To Calls in arrear a/c Amt. unpaid
    To Share forfeiture a/c (Excluding Premium) Amt. paid

    2 S.A. CLASSES Ph: 9874484733


    (Accounts &Commerce Tuition)
    For re-issue of forfeited shares
    (a) for shares initially issued at par or at premium
    Bank a/c Re-issue price
    Share forfeiture a/c Disc. on re-issue
    To Share capital a/c Face value

    The unutilized portion of share forfeiture account is the profit on re-issue


    which is to be transferred to capital reserve
    Share forfeiture a/c
    To capital reserve a/c

    3 S.A. CLASSES Ph: 9874484733


    (Accounts &Commerce Tuition)

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