- Bank A/c Dr..
- To Share Application A/c
- (Being Share Application money received)
- Share Application A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being Share Application money transferred to Share Capital A/c)
- Share Application A/c Dr..
- To Bank A/c
- (Being application money refunded)
- Share Allotment A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being Share Allotment money transferred to share capital A/c and premium transferred to Securities Premium Reserve A/c)
- Bank A/c Dr..
- To Share Allotment A/c
- (Being allotment money received)
- Share 1st Call A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being Share 1st call money transferred to share capital A/c and premium transferred to Securities Premium Reserve A/c)
- Bank A/c Dr..
- To Share 1st Call A/c
- (Being 1st Call money received)
- Share 2nd Call A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being Share 2nd call money transferred to share capital A/c and premium transferred to Securities Premium Reserve A/c)
- Bank A/c Dr..
- To Share 2nd Call A/c
- (Being 2nd Call money received)
- Share 3rd and Final Call A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being Share 3rd and Final call money transferred to share capital A/c and premium transferred to Securities Premium Reserve A/c)
- Bank A/c Dr..
- To Share 3rd and Final Call A/c
- (Being 3rd and Final Call money received)
If any calls are received in advance
- Bank A/c Dr..
- To Calls in Advance A/c
- (Being calls received in advance)
- Calls in Advance A/c Dr..
- To Share Allotment/1st/2nd/3rd Call A/c (as applicable)
- (Being Calls in advance adjusted against respective call)
Forfeiture of Shares
- Share Capital A/c Dr.. (with the amount called up)
- To Forfeited Shares A/c Dr.. (with the amount forfeited)
- To Share Allotment/1st/2nd/3rd Call (As applicable)
- To Calls in arrears A/c (In case calls in arrears account is used)
- (Being Shares forfeited)
- Bank A/c Dr..
- Forfeited Shares A/c Dr.. (if shares reissued at discount)
- To Share Capital A/c (with the amount considered as paid up on reissue)
- To Securities Premium Reserve A/c (if shares reissued at premium)
- (Being forfeited shares reissued)
- Forfeited Shares A/c Dr..
- To Capital Reserve A/c
- (Being balance in forfeited shares A/c transferred to capital reserve A/c)
Calls in Arrears
If calls in arrears account is used then the arrear amount is kept in a separate account and the Share allotment or share call account are credited with the full amount. Journal entries will change as below :
- Bank A/c Dr..
- Calls in Arrears A/c Dr..
- To Share Allotment/1st/2nd/3rd Call A/c (if applicable)
In case the whole amount is payable on application
- Bank A/c Dr..
- To Share Application and Allotment A/c
- (Being share application money received)
- Share Application and Allotment A/c Dr..
- To Share Capital A/c
- (Being application money transferred to share capital A/c)
Share issued for consideration other than cash
- Sundry Assets A/c Dr..
- To Vendor A/c
- (Being assets purchased from vendor)
- Vendor A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- To Cash/Bank A/c (if any part of consideration is paid in cash/bank)
- (Being purchase consideration paid through issue of shares)
Issue of Shares to Promoters
- Preliminary Expenses/Incorporation Expenses A/c Dr..
- To Promoter A/c
- (Being amount payable to promoters for incorporation expenses)
- Promoter A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being shares issued to promoters for incorporation expenses)
The preliminary expenses are written off from the securities premium reserve A/c or from Statement of Profit and Loss A/c in the year entry is made in books of accounts for expenses incurred
Issue of shares to underwriters
- Underwriting Expenses A/c Dr..
- To Underwriter A/c
- (Being amount payable to underwriters for underwriting commission)
- Underwriter A/c Dr..
- To Share Capital A/c
- To Securities Premium Reserve A/c (if any)
- (Being shares issued to underwriter for underwriting commission)
The Underwriting expenses are written off from the securities premium reserve A/c or from Statement of Profit and Loss A/c in the year it is incurred