MODULE - 5 Issue of Shares

Company Accounts
Illustration 4

Sunita Ltd. was registered with an authorised capital of ` 50,00,000 divided in 50,000
shares of ` 100 each. Company issued 20,000 shares at a premium of ` 20 per share.
Amount receivables as ` 40 on application, ` 40 on allotment (including premium)
` 20 on first call & ` 20 on second & final call. All shares were subscribed & all
money was duly received. Share issue expenses amounted to ` 20,000 which were
Notes fully written off against securities premium reserve A/c. Pass necessary Journal entries
& Prepare Bank A/c, Security Premium A/c and Balance Sheet.

Solution :

Journal

Particulars L.F. Dr. Cr.

` `

Bank A/c Dr. 8,00,000

To Share Application A/c 8,00,000
(Being application money received for
20000 shares @ ` 40 per share)

Share Application A/c Dr. 8,00,000

To Share Capital A/c 8,00,000
(Being application money transferred to
Share Capital A/c)

Share Allotment A/c Dr. 8,00,000

To Share Capital A/c 4,00,000
To Securities Premium Reserve A/c 4,00,000
(Being allotment money due with premium)

Bank A/c Dr. 8,00,000

To Share Allotment A/c 8,00,000
(Being allotment money received
with premium)

Share First Call A/c Dr. 4,00,000

To Share Capital A/c 4,00,000
(Being First Call due @ ` 20 per share)

404 Accountancy
 Issue of Shares MODULE - 5
Company Accounts
Bank A/c Dr. 4,00,000
To Share First Call A/c 4,00,000
(Being First call money received)

Share Second & Final Call A/c Dr. 4,00,000

To Share Capital A/c 4,00,000
(Being Second Call due @ ` 20 per share)

Bank A/c Dr. 4,00,000 Notes

To Share Second & Final Call A/c 4,00,000
(Being Second call money received)

Share Issue Expenses/Preliminary

Expenses A/c Dr. 20,000
To Bank A/c 20,000
(Being expenses incurred on issue of shares)

Securities Premium Reserve A/c Dr. 20,000

To Share issue Expenses A/c 20,000
(Being share issue expenses written off
against securities premium account)

Bank Account
Dr. Cr.
Particulars ` Particulars `
To Share Application A/c 8,00,000 By Share Issue Exp. A/c 20,000
To Share Allotment A/c 8,00,000 By Balance c/d 23,80,000
To Share First Call A/c 4,00,000
To Share Second Call A/c 4,00,000
24,00,000 24,00,000
Securities Premium Reserve Account
Dr. Cr.

Particulars ` Particulars `
To Share Issue Exp. A/c 20,000 By Share Allotment A/c 4,00,000
To Balance c/d 3,80,000

4,00,000 4,00,000

Accountancy 405
MODULE - 5 Issue of Shares
Company Accounts
Balance Sheet of Sunita Ltd.
as at .................

Particulars Note `

I. Equity & Liabilities

(1) Shareholder’s Funds
(a) Share Capital 1 20,00,000
Notes (b) Reserve and Surplus 2 3,80,000

Note 1

Share Capital
Authorised Capital
50000 shares of ` 100 each 50,00,000
Issued Capital
20000 shares of ` 100 each 20,00,000
Subscribed
Subscribed & Fully Paid up
20000 shares of ` 100 each 20,00,000
Note 2
Reserves & Surplus : Securities Premium Reserve 3,80,000
Dislosure of Share Capital in Company’s Balance Sheet (Vertical form)
According to schedule V1, Part I of the companies Act 1956, the Share Capital of
a company is shown in the Balance Sheet as given below.
Balance Sheet of a Company (an extract)
as at ........................
Particulars Note `
I. Equity and Liabilities
(1) Shareholders Funds
(a) Share Capital
(b) Reserves and Surplus
(c) Money received against share accounts

(2) Share Application Money Pending Allotment

406 Accountancy