1. If you get an application for a lesser share of the shares issued by company then keep in mind the number of share application received and accordingly record the transactions.
2. If applications are received for more mumber of shares than issued for public subscription then excess application money are refunded to share applicants and regarding received amount it should be debited to Share application A/c and credited to Bank A/c. Then after all the accounting treatments are given keeping in mind the allotted shares.
3. If company has issued both equity shares as well as a preference share, then while calculation put the equity and preference word before the word share in the accounting notes.
4. When the shareholder do not pay the share allotment or share call money in time :
- Transfer the amount not received from sharefolder to Calls in arrears A/c and credited to Share allotment A/c or Respective call A/c.
- In future if these amount is reveived then debit to Bank A/c and credit to Call in arrears A/c.
- If these amount is not received and these share are forfeited then at the time of forfeiture, credit to Calls in arrears A/c and account has been closed.
- Sometimes amount not received from shareholder has been transferred to Share allotment or Share calls A/c instead of Calls in arrears A/c with actual received amont. In future if this amount received then it debited to Bank A/c and credited to Share allotment A/c or Respective call A/c. If this amount is not received then these shares has been forfeited.
5. If any share holders pay advance amount towards allotment or call then in that circumstances :
- Amount received in advance for share allotment will be credited to Share allotment A/c and amount received in advance for call will be credited to Calls in advance A/c.
- When actual amount of call is received then it will be debited to Calls in advance A/ c and credited to Respective call A/c.
6. When shares are issued at premium has been forfeited;
- If amount of premium is received on forfeited shares then no entry will be given.
- If amount of premium is not received on forfeited shares then at the time of forfeiture, this ‘ not received amount is debited to Securities premium A/c.
7. If forfeited shares are reissued with premium then amount of premium will be credited to securities premium A/c. If forfeited share are reissued at discount then amount of discount will be debited to Share forfeiture A/c.
8. The maximum discount can be given on reissue of forfeited shares is equal to the amount forfeited on capital account which was received on these shares.
9. If some of the forfeited shares are re-issued then the proportion of the forfeited share is found out by the following formula :
- Proportional Balance of Forfeited Shares = Total amount of Forfeited Shares \(\times \frac{Reissue\, of\, Shares }{ Total \,Forfeited\, Shares }\)
- If these shares are issued by discount then total amount of discount will be debited to Share forfeited account and remaining share forfeiture amount will be transferred to capital reserve account.
10. When company purchases any business and shares are issued for consideration then if value of issued shares is higher than the net assets of business, the amount of difference is transferred to Goodwill Account, but if the value of issued shares is less than the net assets of business, the difference is transferred to Capital Reserve Account.
