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A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry?
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A ltd company with registered capital of 100000 shares of 10each issue...
**Journal Entry for a Company Issuing Shares**
When a limited company issues shares, it needs to record the transactions in its accounting books. In this case, the company has a registered capital of 100,000 shares with a face value of $10 each. It has issued 4,000 shares with a payment schedule of $1 on application, $2 on allotment, $3 on the first call, and the balance on the final call. Let's break down the journal entries for each stage of the payment.
**1. Application Stage:**
At this stage, the company receives applications for shares and collects the payment of $1 per share. The journal entry to record this transaction is as follows:
**Share Application Account** (Debit) - $4,000
To **Share Capital Account** (Credit) - $4,000
Explanation: The Share Application Account represents the amount received from the applicants. The Share Capital Account represents the increase in the company's share capital.
**2. Allotment Stage:**
After the applications are reviewed, the company allots shares to the applicants and collects the allotment money of $2 per share. The journal entry to record this transaction is as follows:
**Share Allotment Account** (Debit) - $8,000
To **Share Application Account** (Credit) - $4,000
To **Share Capital Account** (Credit) - $4,000
Explanation: The Share Allotment Account represents the allotment money received. The Share Application Account is credited because the amount received on application is now adjusted against the allotment money. The Share Capital Account is credited to record the increase in share capital.
**3. First Call Stage:**
At this stage, the company calls for the first installment of $3 per share. The journal entry to record this transaction is as follows:
**First Call Account** (Debit) - $12,000
To **Share Allotment Account** (Credit) - $8,000
To **Share Capital Account** (Credit) - $4,000
Explanation: The First Call Account represents the first installment money received. The Share Allotment Account is credited because the allotment money is adjusted against the first call money. The Share Capital Account is credited to record the increase in share capital.
**4. Final Call Stage:**
Finally, the company calls for the balance amount on the shares. Since all payments have been duly received at this stage, there is no need for a journal entry.
In summary, the journal entries for issuing shares in this scenario are as follows:
- Share Application Account (Debit) - $4,000
- Share Capital Account (Credit) - $4,000
- Share Allotment Account (Debit) - $8,000
- Share Application Account (Credit) - $4,000
- Share Capital Account (Credit) - $4,000
- First Call Account (Debit) - $12,000
- Share Allotment Account (Credit) - $8,000
- Share Capital Account (Credit) - $4,000
These journal entries accurately record the issuance of shares and the corresponding payments received by the company.
When a limited company issues shares, it needs to record the transactions in its accounting books. In this case, the company has a registered capital of 100,000 shares with a face value of $10 each. It has issued 4,000 shares with a payment schedule of $1 on application, $2 on allotment, $3 on the first call, and the balance on the final call. Let's break down the journal entries for each stage of the payment.
**1. Application Stage:**
At this stage, the company receives applications for shares and collects the payment of $1 per share. The journal entry to record this transaction is as follows:
**Share Application Account** (Debit) - $4,000
To **Share Capital Account** (Credit) - $4,000
Explanation: The Share Application Account represents the amount received from the applicants. The Share Capital Account represents the increase in the company's share capital.
**2. Allotment Stage:**
After the applications are reviewed, the company allots shares to the applicants and collects the allotment money of $2 per share. The journal entry to record this transaction is as follows:
**Share Allotment Account** (Debit) - $8,000
To **Share Application Account** (Credit) - $4,000
To **Share Capital Account** (Credit) - $4,000
Explanation: The Share Allotment Account represents the allotment money received. The Share Application Account is credited because the amount received on application is now adjusted against the allotment money. The Share Capital Account is credited to record the increase in share capital.
**3. First Call Stage:**
At this stage, the company calls for the first installment of $3 per share. The journal entry to record this transaction is as follows:
**First Call Account** (Debit) - $12,000
To **Share Allotment Account** (Credit) - $8,000
To **Share Capital Account** (Credit) - $4,000
Explanation: The First Call Account represents the first installment money received. The Share Allotment Account is credited because the allotment money is adjusted against the first call money. The Share Capital Account is credited to record the increase in share capital.
**4. Final Call Stage:**
Finally, the company calls for the balance amount on the shares. Since all payments have been duly received at this stage, there is no need for a journal entry.
In summary, the journal entries for issuing shares in this scenario are as follows:
- Share Application Account (Debit) - $4,000
- Share Capital Account (Credit) - $4,000
- Share Allotment Account (Debit) - $8,000
- Share Application Account (Credit) - $4,000
- Share Capital Account (Credit) - $4,000
- First Call Account (Debit) - $12,000
- Share Allotment Account (Credit) - $8,000
- Share Capital Account (Credit) - $4,000
These journal entries accurately record the issuance of shares and the corresponding payments received by the company.
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A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry?
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A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry?.
A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A ltd company with registered capital of 100000 shares of 10each issued 4000shares payable as 1 on application 2on allotment 3on first call and the balance on final call. All payment were duly received you are required to give journal entry?.
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