Journal Entry for Payment of Share Issue Expenses

The payment of share issue expenses is a necessary step in the process of issuing shares. These expenses are incurred during the process of issuing shares and include various costs such as legal fees, printing costs, underwriting fees, and other expenses related to the issue of shares. The following journal entry is made for the payment of share issue expenses:

Step 1: Debit the Share Issue Expenses Account
The first step is to debit the share issue expenses account. This account is considered as an expense account and therefore, the debit entry is made to increase the expenses. The amount of the debit entry is equal to the total amount of the share issue expenses.

Step 2: Credit the Bank Account
The second step is to credit the bank account. This account is considered as an asset account and therefore, the credit entry is made to increase the assets. The amount of the credit entry is equal to the total amount of the share issue expenses.

Example: Journal Entry for Payment of Share Issue Expenses
Suppose a company ABC Ltd. has issued 1000 shares at a face value of $10 per share. The total amount raised through the issue of shares is $10,000. The company has incurred share issue expenses of $500. The following is the journal entry for the payment of share issue expenses:

Share Issue Expenses Account Debit $500
Bank Account Credit $500

Conclusion
The payment of share issue expenses is an important step in the process of issuing shares. These expenses are incurred during the process of issuing shares, and the journal entry for the payment of share issue expenses involves debiting the share issue expenses account and crediting the bank account. The amount of the debit entry is equal to the total amount of the share issue expenses, and the amount of the credit entry is equal to the total amount of the share issue expenses.

If securities premium reserve is provided in the question then the journal entry will be :-
Share expenses A/C..........Dr.
To Securities Premium Reserve A/C
(Being expenses incurred on issue of shares )
If securities premium reserve is not provided in the question. then the journal entry will be :-
Share issue expenses A/C ......Dr.
To Cash/Bank A/C
hope this helps