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What is the journal entry of when we recive all the share allotment amount on application?
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What is the journal entry of when we recive all the share allotment am...
When a company receives the payment for share allotment on application, the journal entry would depend on the company's accounting method. If the company uses the cash basis of accounting, the journal entry would be:
Debit: Cash
Credit: Share Capital
If the company uses the accrual basis of accounting, the journal entry would be:
Debit: Share Capital
Credit: Receivable
In either case, the journal entry reflects an increase in the company's share capital and a corresponding increase in either cash (if using the cash basis) or accounts receivable (if using the accrual basis). The share capital represents the funds that have been raised by the company through the sale of its shares.
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What is the journal entry of when we recive all the share allotment am...
Journal Entry for Receipt of Share Allotment Amount on Application
When a company receives the share allotment amount on application, it records the transaction in its books through a journal entry. The journal entry is as follows:
Key Points:
- Debit Bank Account: The bank account is debited as the company receives cash from the applicants against the allotment of shares. This increases the cash balance of the company.
- Credit Share Capital Account: The share capital account is credited as the company issues shares to the applicants against the allotment amount received. This represents the increase in the company's share capital.
- Credit Share Allotment Account: The share allotment account is credited to record the receipt of the share allotment amount. This account is a part of the share capital and represents the amount received from shareholders against the allotment of shares.
Example:
Let's say a company receives $50,000 as share allotment amount on application. The journal entry for this transaction would be:
- Bank Account Debit: $50,000
- Share Capital Account Credit: $40,000
- Share Allotment Account Credit: $10,000
This journal entry reflects the increase in the company's cash balance and share capital due to the receipt of the share allotment amount on application.
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What is the journal entry of when we recive all the share allotment amount on application?
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What is the journal entry of when we recive all the share allotment amount on application? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What is the journal entry of when we recive all the share allotment amount on application? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the journal entry of when we recive all the share allotment amount on application?.
What is the journal entry of when we recive all the share allotment amount on application? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about What is the journal entry of when we recive all the share allotment amount on application? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the journal entry of when we recive all the share allotment amount on application?.
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