A company raises capital by issuing shares under the Companies Act, 2013.
Share capital in the Balance Sheet
- Authorised — the maximum capital in the Memorandum.
- Issued — offered to the public. Subscribed — taken up by the public.
- Called-up and Paid-up — the part asked for and the part received.
The usual entries
| Stage | Entry |
|---|---|
| Application money received | Bank A/c Dr. To Share Application A/c |
| Transfer on allotment | Share Application A/c Dr. To Share Capital A/c |
| Allotment due | Share Allotment A/c Dr. To Share Capital A/c (and Securities Premium A/c) |
| Calls due | Share First Call A/c Dr. To Share Capital A/c |
Calls in arrears are deducted from subscribed capital; calls in advance are shown as a current liability. Under Table F, interest on calls in arrears may be charged up to 10% p.a. and interest on calls in advance paid up to 12% p.a.
Securities premium (Section 52)
May be used for fully paid bonus shares, writing off preliminary expenses, writing off expenses, commission or discount on issue of securities, premium payable on redemption, and buy-back of own securities.
Over-subscription
Applications may be rejected (money refunded), or shares allotted pro-rata; the excess application money is adjusted towards allotment and, if allowed, calls.
Forfeiture and reissue
- Forfeiture: Share Capital A/c Dr. (called-up amount) To Forfeited Shares A/c (amount received) To unpaid calls.
- Reissue: discount on reissue cannot exceed the forfeited amount on those shares.
- The gain left on reissued shares is transferred to Capital Reserve.
Recorded lectures for this chapter
28 lectures (10 h 22 min) by Ronak Dugar in Class 12 Accountancy Book 2: Company Accounts — Shares and Debentures. Enrolled students watch them in the student portal.
- Class 1 - Basics of a Company, Journal Entries34 min
- Class 2 - Topic of Calls in Arrears20 min
- Class 3 - Topic of Calls in Advance19 min
- Class 4 - Comprehensive Questions of Calls in Arrears & Advance15 min
- Class 5 - Concept of Securities Premium with some Practical Questions31 min
- Class 6 - Comprehensive Question including Calls in Arrears, Advance, Securities Premium. Topic of Issue of shares for consideration other than cash (Vendor)31 min
- Class 7 - Practical Question of Shares issued other than cash (Vendor)26 min
- Class 8 - Concept of Pro Rata Table in case of Oversubscription with a Practical Question30 min
- Class 9 - Practical Question of Pro Rata including Calls in Arrears26 min
- Class 10 - Forfeiture & Reissue of Shares Cases25 min
- Class 11 - Forfeiture & Reissue of Shares Cases part 227 min
- Class 12 - Practical Questions Forfeiture & Reissue21 min
- Class 13 - Practical Question of Forfeiture & Reissue19 min
- Class 14 - Comprehensive Question of Full Subscription including Forfeiture & Reissue21 min
- Class 15 - Comprehensive Question including Forfeiture & Reissue of shares issued at Premium14 min
- Class 16 - Comprehensive Question of Pro Rata including Forfeiture & Reissue28 min
- Class 17 - Comprehensive Question of Pro Rata including Forfeiture & Reissue. Reissued shares include full shares of one holder & some of other.26 min
- Class 18 - Question of Forfeiture Reissue (Pro rata). Usage of pro rata ratio14 min
- Class 19 - Question of Pro Rata where Application & Allotment is a combined ledger19 min
- Class 20 - Comprehensive HOTS Full Fledged Question of Pro Rata26 min
- Class 21 - HOTS Question of Pro rata where one shareholder is giving advance & another with arrears. Also adjustment of excess money towards first call.21 min
- Class 22 - Topic of Partial Premium in Pro Rata Question17 min
- Class 23 - Forfeiture Reissue Question of Partial Premium, Formation of Cash Book.10 min
- Class 1 - Shares Balance Sheet Cases (6 Cases)22 min
- Class 2 - Shares Balance Sheet Cases (2 Cases)15 min
- Class 3 - Shares Balance Sheet Cases (2 Cases)16 min
- Class 4 - Practical Questions of Shares B/s15 min
- Class 5 - Practical Question of Shares B/s. Basic & Question of Debentures B/s21 min
Learn this chapter with Ronak Sir
Classroom batches in Sector 9, Faridabad and recorded lectures online. Book a free demo class or call +91 83685 45620.