Journal Entries - Issue of Shares

Journal Entries for Issue of Shares

1	1.       On receipt of application money                 Bank A/c                                              Dr ( for the full amount received on application)                                 To Share application A/c
2	2.       On acceptance of application                 Share application A/c                    Dr ( with the application money on allotted shares)                                 To Share capital A/c
	When shares are issued at premium, and premium is payable with application money               Share application A/c                       Dr ( with the application money + premium on allotted shares)                                 To Share capital                        ( application money only)                                 To Security Premium A/c        (amount of premium)
	When excess  of application money is returned               Share application A/c                          Dr                                           To Bank A/c
3	3.       On making allotment due                 Share allotment A/c                       Dr ( with the allotment money on allotted shares)                                 To Share capital
	When shares are issued at premium, and premium is payable with allotment  money               Share allotment A/c                          Dr ( with the allotment money + premium on allotted shares)                                 To Share capital                        ( allotment money only)                              To Security Premium A/c        (amount of premium)
	When shares are issued at discount               Share allotment A/c                          Dr (with the allotment money on allotted shares)               Discount on issue of shares A/c           Dr (amount of discount)                                 To Share capital                        ( allotment money + discount )
4	When excess application money if any is adjusted towards allotment                  Share application A/c                          Dr (amount adjusted to allotment)                                   To Share allotment A/c
	4.       On receipt of allotment money                 Bank A/c                                              Dr (with the actual amount received)                                 To Share allotment A/c
	When any advance money is paid towards any calls together with the allotment money                  Bank A/c                                             Dr (with the actual amount received)                                 To Share allotment A/c                              To Calls in advance A/c           (advance amount received)
5	5.       On making first/second/final call                 Share first call A/c                           Dr ( with the call money on allotted shares)                                 To Share capital A/c
6	When excess application money if any is adjusted towards call                  Share application A/c                          Dr (amount adjusted to call)                                 To Share first/second/final A/c
	When adjusting calls in advance to first/second/final call                  Calls in advance A/c                          Dr (advance amount)                                 To Share first/second/final A/c
	6.       On receipt of first/second/final call money                 Bank A/c                                              Dr (with the actual amount received)                                 To Share first/second/final call

Journal entries for the issue of shares for consideration other than cash

a. When property is acquired    Property or Asset A/c                     Dr (with cost)                To Vendor

b. When shares are issued in exchange for the value of property       Vendor A/c                                   Dr       Discount on Issue A/c                              Dr (in case of discount)                 To Share Capital                                     (face value)                To Security Premium A/c                   (in case of premium)

Journal For forfeiture of shares

Share Capital A/c                         Dr (with the amount called up, ie amount paid +unpaid)                 Security Premium A/c                    Dr (with the unpaid amount of premium)                                 To Share Allotment              (with the unpaid amount on allotment)                                 To Share Call                           (with the unpaid amount on call)                                 To Discount on Issue of Shares A/c (if shares are issued at discount)                                 To Forfeited Shares A/c    (with the amount paid excluding premium)

 Journal For re issue of forfeited shares

Bank A/c                                                             Dr (amount received on re-issue)

 Discount on Issue of Shares A/c           Dr (with the amount of original discount if the   

                                                                                               Shares originally were issued at discount)         

   Forfeited Shares A/c                                      Dr (with the discount or loss on re-issue)

                                To Share Capital A/c                             (with the amount credited as paid up)

                                To Security Premium A/c                   (with the amount of premium on re-issue)

If all forfeited shares have been re-issued, the credit balance left in the Forfeited Shares A/c being a capital profit should be transferred to Capital Reserve A/c by passing the following journal entry:

                Forfeited Shares A/c                                      Dr

                                To Capital Reserve A/c

                If only a part of the forfeited shares have been re-issued, only the profit on shares which have been re-issued is transferred to Capital Reserve A/c.

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