Capital .Liability .Expenses. Assets.

Revenue

C.L.E.A.R rule /C.L.R + =

cr.
/E.A + = dr. / vice a versa
1. Issue of prospectus
2. Receiving applications
3. Allotment of shares
4. Making calls

Issue of Shares at Par

Assets + 1. Bank a/c dr. xxx
Liability +
to share application a/c xxx
Liability -
2. Share application a/c dr. xxx
Capital +
to share capital a/c xxx
Assets +
3. Share allotment a/c dr. xxx
Capital +
to share capital a/c xxx
Assets -
4. Bank a/c dr. xxx
Assets -
to share allotment a/c xxx
Assets +
5. Share first call a/c dr. xxx
Capital +
to share capital a/c xxx
Assets +
6. Bank a/c dr. xxx
Assets -
to share first call a/c xxx
Assets + 7. Share final call a/c dr. xxx
Capital + to share capital a/c xxx
Assets + 8. Bank a/c dr. xxx
Assets - to share final call a/c xxx

Issue of Shares at Premium

When Premium money is received with Premium = capital profit

Application money cr. "securities premium reserve a/c"

1. Bank a/c dr. xxx

to share application a/c xxx
2. Share application a/c dr. xxx
to share capital a/c xxx
to security premium reserve a/c xxx

rest remain same if premium is there only on

application

When Premium money is recieved with

Allotment money

1. Share allotment a/c dr. xxx

to share capital a/c xxx
to securities premium reserve a/c xxx
2. Bank a/c dr. xxx
to share allotment a/c xxx

other entries will be same

Solution of Question

1. Bank a/c dr. 350000

to share application a/c 350000
2. Share application a/c dr. 350000
to share capital a/c 210000
to securities premium reserve a/c 140000
3. Share allotment a/c dr. 280000
to share capital a/c 140000
to securities premium reserve a/c 140000
4. Bank a/c dr. 280000
to share allotment a/c 280000
5. Share first call a/c dr. 420000
to share capital a/c 210000
to securities premium reserve a/c 210000
6. Bank a/c dr. 420000
to share first call a/c 420000
7. Share final call a/c dr. 210000
to share capital a/c 140000
to securities premium reserve a/c 70000
8. Bank a/c dr. 210000
to share final call a/c 210000

Calls in Arrears

When share holder makes defaults in the amount

called up, the amount which is not received by the
company is Calls in Arrears

1. bank a/c dr.

calls in arrears a/c dr.
Note : We have to call total due to share allotment ac
amount and changes are done on
this is how calls in
receival arrears a/c is made

Eg . 100000 shares of 10 each issued at

par
payable as 2,3,2,3
A, share holder who holds 6000 shares
failed to pay allotment and calls

1. Bank a/c dr. 200000

to share application a/c 200000
2. Share application a/c dr. 200000
to share capital a/c 200000
3. Share allotment a/c dr. 300000
to share capital a/c 300000
4. Bank a/c dr. 282000
to share allotment a/c 282000
5. Share first call a/c dr. 200000
to share capital a/c 200000
6. Bank a/c dr. 188000
to share first call a/c 188000
7. Share final call a/c dr. 300000
to share capital a/c 300000
8. Bank a/c dr. 282000
to share final call a/c 282000

Forfeiture of shares

It is cancellation of shares

excluding premium amount called up Share capital a/c dr. xxx

amount received to share forfeited a/c xxx
amount not received to unpaid calls/ calls in arrears xxx

Eg. Vishal ltd. forfeited 1000 shares of 10

each ,8 calledup, 5 paid up Note : it is
mandatory to
transfer capital
share capital a/c dr. 8000 profit in capital
to share forfeited a/c 5000 reserve

to calls in arrears 3000

Reissue of forfeited shares

Difference

amount recieved Bank a/c dr. xxx

Note : if there is
loss or discount on reissue Share forfeited a/c dr. xxx any loss on
amount paid up to share capital a/c xxx reissue of shares
if any it will be shown in
to securities premium reserve a/c xxx

Note : if there is
any extra sum
remaining after Note : 3 thing to remember when there is
reissue it will be reissue of share
shown in
1. No of shares reissued
2. amount rec. per share on reissue
goes into bank
3. amount paid up or called up per share on
reissue
goes into capital a/c

If paid up value on
Eg. Vishal ltd. forfeited 1000 shares of 10 each ,8 reissue is not given , then
calledup, 5 paid up amount called up at the
All the forfeited shares were reissued at 7 each time of forfeiture will be
fully paid up treated as paid up value

Bank a/c dr. 7000

Share forfeited a/c dr. 3000
to share capital a/c 10000

This is done after reissue

Balance of share forfeited a/c on reissued shares will

be transferred to capital reserve

Share forfeited a/c dr. xxx

to capital reserve a/c xxx

According to law
maximum amount
which can be
discounted on the
reissue of share can't
exceed the share
forfeited amount
(capital profit)

Forfeiture of shares which were issued at Premium

Share capital a/c dr. xxx

Securities premium reserve a/c dr. xxx
to share forfeited a/c xxx
to unpaid calls xxx

Eg . Vishal ltd. forfeited 1000 shares of 10 each issued at

premium of 30% (payable with allotment), for the non
payment of 1st call of 2 per share. final call of 2 was not made.

Share capital a/c dr. 8000

to share forfeited a/c 6000
to share 1st call a/c 2000