Accounts Accounting of Share Capital # Part 1

Share Capital: 10 Parts

9

1

2

3

4

5

7

8

6

10

 

Introduction

Shares ·         Equity Shares ·         Preference Shares (Redeemable)

Company

Company is Artificial Person 

It raises the funds

·       Shares

·       Bank Loan

·       Debentures

·       Deposits

·       Other means (ADR, GDR etc)

Two Types
of Shares

·      
Equity Shares

·      
Preference Shares (to be redeemed after certain
Period)

Authorised Capital

Company cannot issue shares beyond its authorized share
capital

(It is also called nominal Capital, Registered Capital)

For Example

Company’s Authorised Capital is Rs. 10 Lac (divided in to 1
Lac shares of Rs. 10 each)

Face Value & Issue Price

Each share is of fixed Denomination called Face Value or
nominal value of share

·      
Example (Rs. 10 per share)

Company may Issue its share at

·       Par (Rs.
10)

·       Premium (Rs. 12)

·        
Discount
(Rs. 9)

Share Application

Normally Company demands the money
in installments

For Example

·       Application        1     
                              

·       Allotment           4        

·       First Call             3

·       Second Call        1

Oversubscription  

When Shares applied are more than shares to be issued

Example

·      
Shares to be issued : 2,00,000
Shares of Rs. 10 each (Application Money Rs. 1 per share)

·      
Applications received for 3,00,000
Shares (Excess application for 1,00,000 Shares)

Company may

·       Refund the money for excess
application (1,00,000 x 1 = 1,00,000)

·       Allot the Shares
on Prorata basis
(2 shares issued for every 3 shares applied)

Calls in Arrears

For Example: One Shareholder who
was allotted 100 shares did not pay the First Call & Second Call

                                                          100

                                                          Ravan

·       Application        1     
                              

·       Allotment           4                  

·       First Call             3                  X

·       Second Call        1                  X

Calls in Advance

For Example: One Shareholder who
was allotted 300 shares has paid the First Call & Second Call along with
allotment

                                                          300

                                                          Ram

·       Application        1     
                              

·       Allotment           4                  

·       First Call             3                  A

·       Second Call        1                  A

  

Forfeiture

For Example: One Shareholder who was allotted 100 shares did not pay the
First Call & Second Call

                                                          100

                                                          Ravan

·      





























Application        1                                    

·      









Allotment           4                  

·      




First Call             3                  X

·       Second Call        1                  X