Joint Stock Company

-Accounting Process
Formation of JSC

• Registration
• Memorandoms
• Promotors
• Directors
• Office
• Type of busiess
• others
Types of capitals of shares (Common Stock or Capital Stock)

• Authorized capital (Limit for issuance of share)

• Issued capital (offered initial capital)

• Subscribed & Paid up capital (taken by the General

Public)
Types of Shares

• Commons stock or Capital Stock (C.stock)….Rate of Profit not

fixed

• Preferred Stock (P.stock)….. rate of profit fixed

Issuance Value of Shares

• Par (Rs. 100, issue in Rs. 100)

• Premium (Rs. 100, issue in Rs. 110)

• Discount (Rs. 100, issue in Rs. 90)

Process/steps of issuance of shares/stock

• Announcement for issuance of shares

• Receiving of shares applications

• Issuance of shares of applicants.

Subscribtion/issuance of shares to applicant

• On subscribtion
Company wants to issue 100,000 shares and 100,000 applications received.

• Over subscribtion
Company wants to issue 100,000 shares and 110,000 applications received.

• Under subscribtion.
Company wants to issue 100,000 shares and 95,000 applications received.
 Journal Entries
• Share Issuance
• Share Right
• Share Bonus
Process of issuance of shares

• Announcement of issuance
No entry
• Application received
Bank…… Dr
Ordinary Share Application…..Cr
• Shares issued or allotted to applicants
Ordinary Share Application……Dr
Ordinary Share Capital……….Cr
Over subscribtion (Refunded of extra-
application received)

Ordinary share application …….Dr

Bank…………………………………….Cr
Values of Shares

• Par
Ordinary Share Application….Dr
Ordinary Share Capital………Cr
• Premium
Ordinary Share Application…….Dr
Ordinary Share Capital…………….Cr
Addition Paid in Capital……………Cr
• Discount
Ordinary Share Application………Dr
Additional Paid in Capital………… Dr
Ordinary share Capital……………..Cr
When share allotted to promotors.

Preliminary Expenses………..Dr
Ordinary Share Capital……………Cr
When asset is acquire from vendor against
shares.

Assets (Machinery)…….Dr
Ordinary Share Capital………….Cr
Share Allotted to Directors

Bank……… Dr
Ordinary Share Capital….Cr
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Next

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Bonus and Right of Share
Bonus

• When Bonus are declared

Reserve fund………….Dr
Bonus to Shareholder A/C…..Cr
• When Shares are allotted against Bonus
Bonus to shareholder A/C…….Dr
Ordinary share Capital………Cr
Right

• When Share right is issued

Sundry Shareholders A/C……….. Dr
Ordinary Share Capital……….… Cr
Additional Paid in capital……… Cr
• When Share right amount received.
Bank…… Dr
Sundry Shareholders A/C ….. Cr