Accounting for share
•
• Issue of shares for cash: *Lump sum basis
• *Installment Basis
•
• Issue of share on installment basis:
• Issue of share at par:
• 1.When share application money received:
• Bank a/c Dr
• To share application a/c
• (Being……………………..…………….)
• 2.When share application money transfer to share capital:
• Share application a/c Dr
• To share capital a/c
• (Being………………………..…………)
Contd….
3.When shre allotment money due:
• Share allotment a/c Dr
• To share capital a/c
• (Being………………………………………)
• 4.When share allotment money received:
• Bank a/c Dr
• To share allotment a/c
• (Being…………………………………………...)
• 5.when share first call money due:
• Share first call a/c Dr
• To share capital a/c
• (Being……………………………………..…)
• 6.when share first call money received:
• Bank a/c Dr
• To share first call a/c
• (Being…………………………………….….)
Contd….
• 7.when share second & final call money due:
• Share second & final call a/c Dr
• To share capital a/c
• (Being……………………………………….…)
• 8. when share second & final call money received:
• Bank a/c Dr
• To share second & final call a/c
• (Being………………………………………………….)
Example 1
• 1. ABC company issued 5000 shares for Rs 100 each at par
payable as:
– On application Rs 30
– On allotment Rs 40
– On first call Rs 20
– On second and final call Rs 10
Applications were received for all shares.All shares were duly
alloted.All money were duly received.
Requred: Journal Entries
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr 150000
To Share Application 150000
(Being share application money
received)
Share Application A/c ……..Dr 150000
To Share Capital A/c 150000
(Being share application money
transferred to share capital)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……..Dr 200000
To Share Capital A/c 200000
(Being share allotment money due)
Bank A/c ……..Dr 200000
To Share Allotment A/c 200000
(Being share allotment money
received)
Contd….
Journal Entries
For share first call
Share first call A/c ……..Dr 100000
To Share Capital A/c 100000
(Being share a money due)
Bank A/c ……..Dr 100000
To Share first call A/c 100000
(Being share first call money
received)
Contd….
Journal Entries
For share second and final call
Share second and final call A/c ..Dr 50000
To Share Capital A/c 50000
(Being share a money due)
Bank A/c ……..Dr 50000
To Share second and final call A/c 50000
(Being share first call money received)
Question for Practice
• 1. XYZ company issued 10000 shares for Rs 100 each at par
payable as:
– On application Rs 25
– On allotment Rs 50
– On first call Rs 15
– On second and final call Rs 10
Applications were received for all shares.All shares were duly
alloted.All money were duly received.
Requred: Journal Entries
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr 250000
To Share Application 250000
(Being share application money
received)
Share Application A/c ……..Dr 250000
To Share Capital A/c 250000
(Being share application money
transferred to share capital)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……..Dr 500000
To Share Capital A/c 500000
(Being share allotment money due)
Bank A/c ……..Dr 500000
To Share Allotment A/c 500000
(Being share allotment money
received)
Contd….
Journal Entries
For share first call
Share first call A/c ……..Dr 150000
To Share Capital A/c 150000
(Being share a money due)
Bank A/c ……..Dr 150000
To Share first call A/c 150000
(Being share first call money
received)
Contd….
Journal Entries
For share second and final call
Share second and final call A/c ..Dr 100000
To Share Capital A/c 100000
(Being share a money due)
Bank A/c ……..Dr 100000
To Share second and final call A/c 100000
(Being share first call money received)
Issue of share at premium:
• Amount of premium may be included on application &/ or allotment
&/or call.
• If nothing mentioned; premium is supposed to be included on allotment.
• when premium is included on application:
• Entry for application money:
• Bank a/c Dr
• To share application a/c
• (Being………………….)
• Entry for application money transferred money:
• Share application a/c Dr
• To share capital a/c
• To share premium a/c
• (Being………………….)
• When premium is included on allotment:
• Entry for share allotment money due:
• Share allotment a/c Dr
• To share capital a/c
• To share premium a/c
• (Being………………….)
• Entry for share allotment money received:
• Bank a/c Dr
• To share allotment a/c
• (Being……………….. )
•
Issue of shares at discount:
• Discount is always included on share allotment.
• Discount is shown in Dr side while making allotment money due entry.
• Entry for share allotment money due:
• Share allotment a/c Dr
• Discount on issue of share a/c Dr
• To share capital a/c
• (Being……………….)
• Entry for share allotment money received:
• Bank a/c Dr
• To share allotment a/c
• (Being………………….)
•
Example 1
• 1. ABC company issued 5000 shares for Rs 100 each at 10%
discount payable as:
– On application Rs 30
– On allotment Rs 30
– On first call Rs 20
– On second and final call Rs 10
Applications were received for all shares.All shares were duly
alloted.All money were duly received.
Requred: Journal Entries
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr 250000
To Share Application 250000
(Being share application money
received)
Share Application A/c ……..Dr 250000
To Share Capital A/c 250000
(Being share application money
transferred to share capital)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……..Dr 150000
Discount on issue of shares a/c Dr 50000
To Share Capital A/c
(Being share allotment money due) 200000
Bank A/c ……..Dr 150000
To Share Allotment A/c 150000
(Being share allotment money received)
Contd….
Journal Entries
For share first call
Share first call A/c ……..Dr 100000
To Share Capital A/c 100000
(Being share a money due)
Bank A/c ……..Dr 100000
To Share first call A/c 100000
(Being share first call money
received)
Contd….
Journal Entries
For share second and final call
Share second and final call A/c ..Dr 100000
To Share Capital A/c 100000
(Being share a money due)
Bank A/c ……..Dr 100000
To Share second and final call A/c 100000
(Being share first call money received)
Under subscription of share
• when no. of share applied is less than no. of
issued share issued by company; it is the case
of under subscription of shares.
• In case of under subscription of shares all
entries are made on the basis applied no. of
shares applied
Example
• 1. Y company issued 6000 shares for Rs 100 each at par
payable as:
– On application Rs 30
– On allotment Rs 40
– On first call Rs 20
– On second and final call Rs 10
Applications were received for 5000 shares.All shares were
duly alloted.All money were duly received.
Requred: Journal Entries
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr 150000
To Share Application 150000
(Being share application money
received)
Share Application A/c ……..Dr 150000
To Share Capital A/c 150000
(Being share application money
transferred to share capital)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……..Dr 200000
To Share Capital A/c 200000
(Being share allotment money due)
Bank A/c ……..Dr 200000
To Share Allotment A/c 200000
(Being share allotment money
received)
Contd….
Journal Entries
For share first call
Share first call A/c ……..Dr 100000
To Share Capital A/c 100000
(Being share a money due)
Bank A/c ……..Dr 100000
To Share first call A/c 100000
(Being share first call money
received)
Contd….
Journal Entries
For share second and final call
Share second and final call A/c ..Dr 50000
To Share Capital A/c 50000
(Being share a money due)
Bank A/c ……..Dr 50000
To Share second and final call A/c 50000
(Being share first call money received)
• Over subscription of shares:
• #when no. of shares applied is more than no. of shares issued
by company; it is the case of over subscription of shares.
• #in case of over subscription of shares the company may allot
some application in full and / or some application on pro rata
basis and/or some may be rejected by company.
• # A company can’t allot the shares exceed than of shares
issued.
• Entry for share application money received:
• Bank a/c Dr
• To share application a/c
• (Being……………………..…………….)
• Entry for share application money transfer
• Share application a/c Dr
• To share capital a/c
• To share allotment a/c
• To share first & final call a/c (or calls in advance a/c)
• To bank a/c
• (Being…………………………………………)
Working note
Applied Allotted Excess app. Transfer to
shares shares money
Allotment Call Refund
• 1. Y company issued 6000 shares for Rs 100 each at
par payable as:
– On application Rs 30
– On allotment Rs 40
– On first & final call Rs 30
Applications were received for 8000 shares.
Applications for 1000 shares refunded and
remaining applications were alloted on pro rata
basis.All money were duly received.
Requred: Journal Entries
Working note
Applied Allotted Excess app. Transfer to
shares shares money
Allotment Call Refund
1000 - 30000 - - 3000
7000 6000 30000 30000 - -
8000 6000 60000 30000 30000
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr(8000*30) 240000
To Share Application 240000
(Being share application money
received)
Share Application A/c ……..Dr 240000
To Share Capital A/c 180000
To Share allotment a/c 30000
To Bank A/c 30000
(Being share application money
transferred)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……..Dr 240000
To Share Capital A/c 240000
(Being share allotment money due)
Bank A/c ……..Dr 210000
To Share Allotment A/c (180000- 210000
30000)
(Being share allotment money
received)
Contd….
Journal Entries
For share first and final call
Share first and final call A/c ..Dr 180000
To Share Capital A/c 180000
(Being share a money due)
Bank A/c ……..Dr 180000
To Share first and final call A/c 180000
(Being share first & final call money received)
Question for practice
• 1. XYZ company issued 10000 shares for Rs 100 each at
par payable as:
– On application Rs 30
– On allotment Rs 50
– On first & final call Rs 20
Applications were received for 18000 shares.
Applications for 4000 shares refunded and
remaining applications were alloted on pro rata
basis.All money were duly received.
Requred: Journal Entries
Working note
Applied Allotted Excess app. Transfer to
shares shares money
Allotment@ Call @20 Refund
50
4000 - 4000*30= - - 120000
120000
14000 10000 4000*30= 120000 - -
120000
Total:18000 10000 240000 120000 120000
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr(18000*30) 540000
To Share Application 240000
(Being share application money
received)
Share Application A/c ……..Dr 540000
To Share Capital A/c(10000*30) 300000
To Share allotment a/c 120000
To Bank A/c 120000
(Being share application money
transferred)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……Dr(10000*50) 500000
To Share Capital A/c 500000
(Being share allotment money due)
Bank A/c ……..Dr 380000
To Share Allotment A/c (500000- 380000
120000)
(Being share allotment money received)
Contd….
Journal Entries
For share first and final call
Share first and final call A/c ..Dr(10000*20) 200000
To Share Capital A/c 200000
(Being share a money due)
Bank A/c ……..Dr 200000
To Share first and final call A/c 200000
(Being share first & final call money received)
Mix allotment
1. company issued 10000 shares for Rs 100 each at Rs 90
payable as:
– On application Rs 30
– On allotment Rs 40
– On first & final call Rs 20
Applications were received for 18000 shares. The BOD
decided to allot in following manner:
Applications for 2000 shares – Rejected
Applications for 2000 shares- Full
Remaining applications for 14000 shares- Pro-rata basis
The company has right to utilize excess application money
towards allotment and call.All money were duly
received.
Requred: Journal Entries
Working note
Applied Allotted Excess app. Transfer to
shares shares money
Allotment@ Call @20 Refund
40
2000 - 2000*30= - - 60000
60000
2000 2000 - - - -
14000 8000 6000*30= 180000
180000
Total:18000 10000 240000 180000 60000
Solution:
Journal Entries
Date Particulars L.F Debit Credit
For share application
Bank A/c ……..Dr(18000*30) 540000
To Share Application 540000
(Being share application money
received)
Share Application A/c ……..Dr 540000
To Share Capital A/c(10000*30) 300000
To Share allotment a/c 180000
To Bank A/c 60000
(Being share application money
transferred)
Contd….
Journal Entries
For share allotment
Share Allotment A/c ……Dr(10000*40) 400000
Discount on issue of shares
A/c..Dr(10000*10) 100000
To Share Capital A/c 500000
(Being share allotment money due)
Bank A/c ……..Dr 220000
To Share Allotment A/c (400000- 220000
180000)
(Being share allotment money received)
Contd….
Journal Entries
For share first and final call
Share first and final call A/c ..Dr(10000*20) 200000
To Share Capital A/c 200000
(Being share a money due)
Bank A/c ……..Dr 200000
To Share first and final call A/c 200000
(Being share first & final call money received)
Question for Practice
1. company issued 20000 shares for Rs 100 each at a discount
of 10% payable as:
– On application Rs 30
– On allotment Rs 40
– On first & final call Rs 20
Applications were received for 28000 shares. The BOD
decided to allot in following manner:
Applications for 4000 shares – Rejected
Applications for 4000 shares- Full
Remaining applications for 20000 shares- Pro-rata basis
The company has right to utilize excess application money
towards allotment and call.All money were duly
received.
Requred: Journal Entries
