Dear Sir/Madam,
I need a clarification over rising of working capital in a Pvt. Ltd. company. If a Pvt. Ltd. company requires some cash to run its day to day process, then we call that requiring amount as working capital isn't. Here what is the journal entry should we pass, if an Managing Director of the firm brings cash into business through the registered bank? Take an example ABC Pvt. Ltd. has Rs. 5,00,000/- authorised capital. It's paid up capital is Rs. 5,00,000/- (fully utilised). Now the Mr. Z (Managing Director) brings cash of Rs. 1,00,000/- into business as working capital. Now what is the journal entry? In fact my main doubts are, 1) if I make a journal entry like Bank A/C 'Dr' and Capital A/C 'Cr' doesn't it cross the authorised capital limit? 2) Can I pass a journal entry like Bank A/C 'Dr' and Loan from Director/Mr. Z A/C 'Cr'? Kindly throw some light over this. Please.
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