Share application money

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2011 Sir, Please say me about in the simple meaning what is share application money & how is treated as in the accounts & how the money come to business?

Regards,

Dillip

CA. Nitin Agrawal

CA. Nitin Agrawal (Expert)
Follow

30 August 2011 Dear Anonymous

Share Application Money is the money which a company receipts for issue of share of the company for a consideration. A company may issue its share at face value or above it.

Money receipts above the face value falls under the "Share premium account" and shown under the head share capital with separate heading share premium account.

Un-till allotment of the share, the amount receipt will be shown under heading "share application money"

Example:
Money receipt from Mr. A for issue of 1000 Shares @ Rs 100 (Face value Rs 10 each share)

AT THE TIME OF MONEY RECEIPT:
Cash/Bank A/c Dr Rs 100000
To Share Appl.Money A/c Rs 100000

UPON ALLOTMENT:
Share Appl. Money A/c Dr Rs 100000
To Share Capital A/c Rs 10000
To Share Premium A/c Rs 90000

hope you will get benefited from above.

now cheers