Journal Entry-Issue of shares
This query is : Resolved
19 April 2010
At the time of issue of shares at par:
Share Application A/C.............. DR.
Share Capital A/c.............CR
MY QUERY---- why has share application account been debited while share capital accounts has been credited.
Share Application A/C.............. DR.
Share Capital A/c.............CR
MY QUERY---- why has share application account been debited while share capital accounts has been credited.
19 April 2010
Share application has a credit balance when amount is received. So to make the account zero you have to debit the account and you want to transfer it to share capital should credit that account.
19 April 2010
when you received application money you entered:---
Bank A/c Dr.
To Share application A/c.
Now at the time of allotment your share capital will increase, by transferring the share application balance to capital A/c, by entry mentioned above by you.
Bank A/c Dr.
To Share application A/c.
Now at the time of allotment your share capital will increase, by transferring the share application balance to capital A/c, by entry mentioned above by you.
19 April 2010
getting application money is an invitation to offer. amount received is a liability.
when the share are allotted, the offer is made and a binding contract comes into existence. So share capital is credited after the shares are allotted.
when the share are allotted, the offer is made and a binding contract comes into existence. So share capital is credited after the shares are allotted.
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