Introduction

As seen in the previous lecture on shares Here, there are three classes of shares namely- shares issued at par, shares issued at premium and shares issues at discounts. In this lecture, we shall now discuss the procedures for preparing the accounts for these various classes of shares. Read on below-

Preparation of Account for Issue of Shares at Par

A company may issue shares at their face value or at a price other than the face value. When shares are issued at a price equal to their face value it is termed as shares issued at par. When issue price of a share is more than its face value, it is known as shares issued at a premium. If issue price of a share is less than its face value, it is called as shares issued at a discount. Below are the accounting entries or procedures for preparing the account for  the issue of shares are as follows–

1. On receipt of applications money:

Bank a/c Dr.

To share application a/c

(Being share application money received)

2. On allotment of shares:

(a) Share application a/c Dr.

To share capital a/c

(Being appropriation of application money towards share capital)

(b) Share Allotment a/c Dr.

To share capital a/c

(Being allotment money due on shares @ Rs. per share)

Read more below:

https://passnownow.com/lesson/preparation-of-a…-issue-of-shares/