Synopsis on Joint Stock Company-
Share Issue
Shares Issued for Cash
This is the simplest scenario: shares will be issued to the
holder in exchange for a cash payment. For example, if 1,00,000 common shares
are issued at a price of BDT10 each, the journal entry would be:
Cash Account
Dr. (1,00,000*10) 10,00,000
Common Share
Capital Account Cr. (1,00,000*10) 10,00,000
Balance Sheet
Capital & Liabilities |
|
Assets & Properties |
|
Authorized Capital: 2,00,000 common shares @Tk 10 each Issued Capital: 1,00,000 common shares @Tk 10 each Subscribed Capital: 1,00,000 common shares @Tk 10 each Called up Capital: 1,00,000 common shares @Tk 10 each Paid up Capital: 1,00,000 common shares @Tk 10 each |
20,00,000 10,00,000 10,00,000 10,00,000 10,00,000 |
Cash |
10,00,000 |
|
10,00,000 |
|
10,00,000 |
Shares Issued at
Premium for Cash
For example- A company issued 50,000 common shares with face
value per share BDT 10.00 at a premium per share BDT. 2.00
Cash
Account Dr. (50,000*12) 6,00,000
Common Share
Capital Account Cr. (50000*10) 5,00,000
Share
Premium Account Cr. (50000*2)
1,00,000
Balance Sheet
Capital & Liabilities |
|
Assets & Properties |
|
Authorized Capital: 2,00,000 common shares @Tk 10 each Issued Capital: 50,000 common shares @Tk 10 each Subscribed Capital: 50,000 common shares @Tk 10 each Called up Capital: 50,000 common shares @Tk 10 each Paid up Capital: 50,000 common shares @Tk 10 each Share Premium |
20,00,000 5,00,000 5,00,000 5,00,000 5,00,000 1,00,000 |
Cash |
6,00,000 |
|
6,00,000 |
|
6,00,000 |
Shares Issued at Discount for Cash
For example- A company issued 50,000 common shares with face
value per share BDT 10.00 at a discount per share BDT. 2.00
Cash
Account Dr. (50,000*8) 4,00,000
Share
Discount Account Dr. (50,000*2) 1,00,000
Common Share
Capital Account Cr. (50000*10) 5,00,000
Balance Sheet
Capital & Liabilities |
|
Assets & Properties |
|
Authorized Capital: 2,00,000 common shares @Tk 10 each Issued Capital: 50,000 common shares @Tk 10 each Subscribed Capital: 50,000 common shares @Tk 10 each Called up Capital: 50,000 common shares @Tk 10 each Paid up Capital: 50,000 common shares @Tk 10 each |
20,00,000 5,00,000 5,00,000 5,00,000 5,00,000 |
Cash Share Discount Account |
4,00,000 1,00,000 |
|
5,00,000 |
|
5,00,000 |
Subscribed Shares
Sometimes a company may offer shares on a subscription basis,
allowing the holder to pay for the shares in a series of payments. The
accounting for these types of transactions will depend on local legislation,
the terms of the subscription contract, and corporate policy. We will look at a
few different examples of these types of transactions.
Example-1:
A Company has registered with authorized capital of BDT
100,00,00,000 divided into 10,00,00,000 common shares of BDT 10.00 per share.
The BoD of the company decided to issue 5,00,00,000 shares at par in the
following payment instalments:
At
application BDT 2.00 per share
At
subscription/ allotment BDT 3.00 per share
At 1st
call BDT 3.00 per share and
At final
call BDT 2.00 per share.
The company
received 5,10,00,000 shares application. Consequently the company issued
5,00,00,000 shares to the applicants at proportionately and the excess
application amount refunded. The allotment money received duly but when 1st
call called 2 shareholders holding 50,000 shares could not to pay 1st
call instalment amount and subsequently they failed to pay their 2nd
call instalment amount. Other shareholders paid their calls money duly.
You are
required to prepare necessary journals and Balance sheet considering the above
transactions.
Solution:
1.
Bank
Account Dr. (5,10,00,000*2) 10,20,00,000
Share Application Account Cr. (5,10,00,000*2) 10,20,00,000
2.
Share
Application Account Dr. (5,10,00,000*2) 10,20,00,000
Share Capital Account
Cr. (5,00,00,000*2) 10,00,00,000
Bank Account Cr. (10,00,000*2) 20,00,000
3. Bank Account Dr. (5,00,00,000*3) 15,00,00,000
Share Allotment Account Cr. (5,00,00,000*3) 15,00,00,000
4. Share Allotment Account Dr. (5,00,00,000*3)
15,00,00,000
Share Capital
Account Cr. (5,00,00,000*3) 15,00,00,000
5. Bank Account Dr. (4,99,50,000*3) 14,98,50,000
1st Call in
Arrear Account Dr. (50,000*3) 1,50,000
Share 1st Call
Account Cr.
(5,00,00,000*3)
15,00,00,000
6. Share 1st Call
Account Dr. (5,00,00,000*3) 15,00,00,000
Share Capital
Account Cr. (5,00,00,000*3) 15,00,00,000
7. Bank Account Dr. (4,99,50,000*2) 9,99,00,000
Final Call in Arrear
Account Dr. (50,000*2) 1,00,000
Share Final Call Account Cr. (5,00,00,000*2) 10,00,00,000
8. Share Final Call Account Dr. (5,00,00,000*2) 10,00,00,000
Share Capital Account Cr. (5,00,00,000*2) 10,00,00,000
Bank account
Dr.
Cr.
Date |
Particulars |
Tk. |
Date |
Particulars |
Tk. |
1. 3. 5. 7. |
To Share Application To Share Allotment To Share 1st Call To Share Final Call |
10,20,00,000 15,00,00,000 14,98,50,000
9,99,00,000 |
2. |
By Share Application Balance c/d |
20,00,000 49,97,50,000 |
|
|
50,17,50,000 |
|
|
50,17,50,000 |
Balance Sheet
Capital & Liabilities |
Tk. |
Assets & Properties |
Tk. |
Authorized Capital: 10,00,00,000 common shares @Tk 10 each Issued Capital: 5,00,00,000 common shares @Tk 10 each Subscribed Capital: 5,00,00,000 common shares @Tk 10 each Called up Capital: 5,00,00,000 common shares @Tk 10 each Paid up Capital: Called up capital
50,00,00,000 Less: Calls in Arrear 2,50,000 |
100,00,00,000 50,00,00,000 50,00,00,000 50,00,00,000 49,97,50,000 |
Bank |
49,97,50,000 |
|
49,97,50,000 |
|
49,97,50,000 |
Share Capitals:
Authorized
Capital
Issued
Capital
Subscribed
Capital
Called up
Capital
Paid up
Capital
Example-2:
A Company has
registered with authorized capital of BDT 100,00,00,000 divided into
10,00,00,000 common shares of BDT 10.00 per share. The BoD of the company
decided to issue 5,00,00,000 shares at a premium of BDT 2.00 in the following
payment instalments:
At application BDT
2.00 per share
At subscription/
allotment BDT 5.00 per share (including BDT 2.00 premium per share)
At 1st call
BDT 3.00 per share and
At final call BDT 2.00 per share.
The company received 5,10,00,000 shares application.
Consequently the company issued 5,00,00,000 shares to the applicants at
proportionately and the excess application amount refunded. The allotment money
received duly but when 1st call called 2 shareholders holding 50,000
shares could to pay 1st call instalment amount and subsequently they
failed to pay their 2nd call instalment amount. Other shareholders
paid their calls money duly.
You are
required to prepare necessary journals and Balance sheet considering the above
transactions.
Solution:
1.
Bank
Account Dr. (5,10,00,000*2) 10,20,00,000
Share Application Account Cr. (5,10,00,000*2) 10,20,00,000
2.
Share
Application Account Dr. (5,10,00,000*2) 10,20,00,000
Share Capital Account
Cr. (5,00,00,000*2) 10,00,00,000
Bank Account Cr. (10,00,000*2) 20,00,000
3. Bank Account Dr. (5,00,00,000*5) 25,00,00,000
Share Allotment
Account Cr. (5,00,00,000*5) 25,00,00,000
4. Share Allotment Account Dr. (5,00,00,000*5) 25,00,00,000
Share Capital Account Cr. (5,00,00,000*3) 15,00,00,000
Share Premium
Account Cr. (5,00,00,000*2) 10,00,00,000
5. Bank Account Dr.
(4,99,50,000*3) 14,98,50,000
1st Call in
Arrear Account Dr. (50,000*3) 1,50,000
Share 1st Call
Account Cr.
(5,00,00,000*3)
15,00,00,000
6. Share 1st Call
Account Dr. (5,00,00,000*3) 15,00,00,000
Share Capital
Account Cr. (5,00,00,000*3) 15,00,00,000
7. Bank Account Dr. (4,99,50,000*2) 9,99,00,000
Final Call in Arrear
Account Dr. (50,000*2) 1,00,000
Share Final Call Account Cr. (5,00,00,000*2) 10,00,00,000
8. Share Final Call Account Dr. (5,00,00,000*2) 10,00,00,000
Share Capital Account Cr. (5,00,00,000*2) 10,00,00,000
Bank account
Dr.
Cr.
Date |
Particulars |
Tk. |
Date |
Particulars |
Tk. |
1. 3. 5. 7. |
To Share Application To Share Allotment To Share 1st Call To Share Final Call |
10,20,00,000 25,00,00,000 14,98,50,000
9,99,00,000 |
2. |
By Share Application Balance c/d |
20,00,000 59,97,50,000 |
|
|
60,17,50,000 |
|
|
60,17,50,000 |
Balance Sheet
Capital & Liabilities |
Tk. |
Assets & Properties |
Tk. |
Authorized Capital: 10,00,00,000 common shares @Tk 10 each Issued Capital: 5,00,00,000 common shares @Tk 10 each Subscribed Capital: 5,00,00,000 common shares @Tk 10 each Called up Capital: 5,00,00,000 common shares @Tk 10 each Paid up Capital: Called up capital 50,00,00,000 Less: Calls in Arrear 2,50,000 Share Premium Account |
100,00,00,000 50,00,00,000 50,00,00,000 50,00,00,000 49,97,50,000 10,00,00,000 |
Bank |
59,97,50,000 |
|
59,97,50,000 |
|
59,97,50,000 |
Example-3:
A Company has
registered with authorized capital of BDT 100,00,00,000 divided into
10,00,00,000 common shares of BDT 10.00 per share. The BoD of the company
decided to issue 5,00,00,000 shares at a discount of BDT 2.00 in the following
payment instalments:
At application BDT 2.00 per share
At subscription/ allotment BDT 2.00
per share (excluding BDT 2.00 discount per share)
At 1st call BDT 2.00 per share and
At final
call BDT 2.00 per share.
The company received 5,10,00,000 shares application.
Consequently the company issued 5,00,00,000 shares to the applicants at
proportionately and the excess application amount refunded. The allotment money
received duly but when 1st call called 2 shareholders holding 50,000 shares
could to pay 1st call instalment amount and subsequently they failed to pay
their 2nd call instalment amount. Other shareholders paid their calls money
duly.
You are
required to prepare necessary journals and Balance sheet considering the above
transactions.
Solution:
1.
Bank
Account Dr. (5,10,00,000*2) 10,20,00,000
Share Application Account Cr. (5,10,00,000*2) 10,20,00,000
2.
Share
Application Account Dr. (5,10,00,000*2) 10,20,00,000
Share Capital Account
Cr. (5,00,00,000*2) 10,00,00,000
Bank Account Cr. (10,00,000*2) 20,00,000
3. Bank Account Dr. (5,00,00,000*2) 10,00,00,000
Share Discount
Account Dr. (5,00,00,000*2) 10,00,00,000
Share Allotment
Account Cr. (5,00,00,000*4) 20,00,00,000
4. Share Allotment Account Dr. (5,00,00,000*4) 20,00,00,000
Share Capital
Account Cr. (5,00,00,000*4) 20,00,00,000
5. Bank Account Dr. (4,99,50,000*2) 9,99,00,000
1st Call in Arrear
Account Dr. (50,000*2) 1,00,000
Share 1st Call
Account Cr. (5,00,00,000*2) 10,00,00,000
6. Share 1st Call
Account Dr. (5,00,00,000*2) 10,00,00,000
Share Capital
Account Cr. (5,00,00,000*2) 10,00,00,000
7. Bank Account Dr. (4,99,50,000*2) 9,99,00,000
Final Call in Arrear
Account Dr. (50,000*2) 1,00,000
Share Final Call Account Cr. (5,00,00,000*2) 10,00,00,000
8. Share Final Call Account Dr. (5,00,00,000*2) 10,00,00,000
Share Capital Account Cr. (5,00,00,000*2) 10,00,00,000
Bank account
Dr.
Cr.
Date |
Particulars |
Tk. |
Date |
Particulars |
Tk. |
1. 3. 5. 7. |
To Share Application To Share Allotment To Share 1st Call To Share Final Call |
10,20,00,000 10,00,00,000 9,99,00,000 9,99,00,000 |
2. |
By Share Application Balance c/d |
20,00,000 39,98,00,000 |
|
|
40,18,00,000 |
|
|
40,18,00,000 |
Balance Sheet
Capital & Liabilities |
Tk. |
Assets & Properties |
Tk. |
Authorized Capital: 10,00,00,000 common shares @Tk 10 each Issued Capital: 5,00,00,000 common shares @Tk 10 each Subscribed Capital: 5,00,00,000 common shares @Tk 10 each Called up Capital: 5,00,00,000 common shares @Tk 10 each Paid up Capital: Called up capital
50,00,00,000 Less: Calls in Arrear 2,00,000 |
100,00,00,000 50,00,00,000 50,00,00,000 50,00,00,000 49,98,00,000 |
Bank Share Discount |
39,98,00,000 10,00,00,000 |
|
49,98,00,000 |
|
49,98,00,000 |
Example-4:
A Company Ltd. has registered with authorized capital of BDT
100,00,00,000 divided into 10,00,00,000 common shares of BDT 10.00 per share.
The BoD of the company decided to issue 5,00,00,000 shares at a premium of BDT
2.00 in the following payment instalments:
At application
BDT 2.00 per share
At
subscription/ allotment BDT 5.00 per share (including BDT 2.00 premium per
share)
At 1st call
BDT 3.00 per share and
At final
call BDT 2.00 per share.
The company received
5,10,00,000 shares application on 1st January, 2023. Consequently
the company issued 5,00,00,000 shares to the applicants at proportionately on 1st
February, 2023 and the excess application amount refunded. The allotment money
received duly but when 1st call called on 1st March, 2023 2
shareholders holding 50,000 shares could not to pay 1st call instalment amount
and subsequently they failed to pay their 2nd call instalment amount on 1st
April, 2023. Other shareholders paid their calls money duly. The BoD of the
company decided to forfeit the shares of the shareholders who could not paid
their 2 calls money on 1st May, 2023. The forfeited shares are
reissued at a price of BDT 10 per share on 1st June, 2023.
You are required to prepare necessary journals and Balance sheet as on 30
June, 2023 considering the above transactions.
Solution:
A Company
Ltd.
Journal
Entries
Date |
Particulars |
L.F |
Debit Tk. |
Credit Tk. |
2023 Jan 1 |
Bank Account Dr.
(5,10,00,000*2)
Share Application Account Cr.
(5,10,00,000*2) |
|
10,20,00,000 |
10,20,00,000 |
Jan 1 |
Share Application Account Dr.
(5,10,00,000*2)
Share Capital Account
Cr. (5,00,00,000*2)
Bank Account
Cr. (10,00,000*2) |
|
10,20,00,000 |
10,00,00,000 20,00,000 |
Feb 1 |
Share Allotment Account Dr. (5,00,00,000*5) Share Capital Account Cr. (5,00,00,000*3) Share Premium Account Cr. (5,00,00,000*2) |
|
25,00,00,000 |
15,00,00,000 10,00,00,000 |
Feb 1 |
Bank Account Dr.
(5,00,00,000*5) Share Allotment Account Cr.
(5,00,00,000*5) |
|
25,00,00,000 |
25,00,00,000 |
March 1 |
Share 1st Call Account Dr. (5,00,00,000*3) Share Capital Account Cr. (5,00,00,000*3) |
|
15,00,00,000 |
15,00,00,000 |
March 1 |
Bank Account Dr.
(4,99,50,000*3) 1st Call in Arrear Account Dr. (50,000*3) Share 1st Call Account Cr. (5,00,00,000*3) |
|
14,98,50,000 1,50,000 |
15,00,00,000 |
April 1 |
Share Final Call Account Dr. (5,00,00,000*2) Share Capital Account Cr. (5,00,00,000*2) |
|
10,00,00,000 |
10,00,00,000 |
April 1 |
Bank Account Dr. (4,99,50,000*2 Final Call in Arrear Account Dr. (50,000*2) Share Final Call Account Cr. (5,00,00,000*2) |
|
9,99,00,000 1,00,000 |
10,00,00,000 |
May 1 |
Share Capital Account Dr. (50,000*10) Share Premium Account Dr. (50,000*2) 1st Call in Arrear Account Cr. (50,000*3) Final Call in Arrear Account Cr. (50,000*2) Share Forfeiture Account Cr. (50,000*7) |
|
5,00,000 1,00,000 |
1,50,000 1,00,000 3,50,000 |
June 1 |
Bank Account Dr. (50,000*10) Share Capital Account Cr. (50,000*10) |
|
5,00,000 |
5,00,000 |
Bank account
Dr.
Cr.
Date |
Particulars |
Tk. |
Date |
Particulars |
Tk. |
Jan 1 Feb 1 Mar 1 Apr 1 Jun 1 |
To Share Application To Share Allotment To Share 1st Call To Share Final Call To Share Capital |
10,20,00,000 25,00,00,000 14,98,50,000
9,99,00,000 5,00,000 |
Jan 1 |
By Share Application Balance c/d |
20,00,000 60,02,50,000 |
|
|
60,22,50,000 |
|
|
60,22,50,000 |
Balance Sheet
Capital & Liabilities |
Tk. |
Assets & Properties |
Tk. |
Authorized Capital: 10,00,00,000 common shares @Tk 10 each Issued Capital: 5,00,00,000 common shares @Tk 10 each Subscribed Capital: 5,00,00,000 common shares @Tk 10 each Called up Capital: 5,00,00,000 common shares @Tk 10 each Paid up Capital: Called up capital
50,00,00,000 Less: Calls in Arrear 0 Share Premium Account Share Forfeiture Account |
100,00,00,000 50,00,00,000 50,00,00,000 50,00,00,000 50,00,00,000 9,99,00,000 3,50,000 |
Bank |
60,02,50,000 |
|
60,02,50,000 |
|
60,02,50,000 |
Source:
Mohammad Shahajahan
FCS
Financial Management Specialist
NATP-2 Project, Ministry of Agriculture
-End-
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