The sunshine Co.Ltd. Issued 40,000 equity shares of Rs.10 each and 30,...
Journal entries for the issue of shares by The Sunshine Co. Ltd.
Equity Share Capital
On Application
Debit Bank Account
Credit Equity Share Application Account (2,00,000)
On Allotment
Debit Equity Share Application Account (8,00,000)
Credit Equity Share Allotment Account (4,00,000)
Credit Equity Share Capital Account (4,00,000)
On First and Final Call
Debit Equity Share First and Final Call Account (16,00,000)
Credit Equity Share Capital Account (16,00,000)
Preference Share Capital
On Application
Debit Bank Account
Credit Preference Share Application Account (6,00,000)
On Allotment
Debit Preference Share Application Account (12,00,000)
Credit Preference Share Allotment Account (6,00,000)
Credit Preference Share Capital Account (6,00,000)
On First and Final Call
Debit Preference Share First and Final Call Account (10,50,000)
Credit Preference Share Capital Account (10,50,000)
Explanation:
- The Sunshine Co. Ltd. issued 40,000 equity shares of Rs.10 each and 30,000 12% preference shares of Rs.100 each.
- The equity shares were payable as follows: 2 on application, 4 on allotment, and 4 on the first and final call.
- The preference shares were payable as follows: 2 on application, 20 on allotment, and 35 on the first and final call.
- The total amount of equity shares subscribed was Rs.4,00,000 and the total amount of preference shares subscribed was Rs.30,00,000.
- The journal entries are made to record the issue of shares in the books of The Sunshine Co. Ltd.
- The debit side of the entry represents the cash received and the credit side represents the share capital accounts.
- The equity and preference share capital accounts are credited with the amount received on allotment and first and final call.
- The equity and preference share application accounts are credited with the amount received on application.
- The equity and preference share first and final call accounts are debited with the amount called on shares.