Journal Entry - Issue of shares at par

This query is : Resolved

armchairca (Querist)
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18 April 2010 On receipt of application money:
BANK A/C.......DR
SHARE APPLICATION A/C......CR

while I understand that bank a/c has been debited because it has received money whats confusing is why has share application a/c been credited.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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18 April 2010
AT THE TIME OF SHARE APPLICATION MONEY RECD YOU HAVE MADE CORRECT ENTRY.
BANK A/C DR
SHARE APPLICATION MONEY A/C CR.

SHARE APPLICATIO MONEY A/C IS TO BE CREDITED BECAUSE IT IS LIABIITY OF COMPANY UNTIL UNLESS WE HAVE NOT ISSUE SHARE CAPITAL TO APPLICANT.

AT THE TIME OF ISSUE OF SHARE AT PAR , ENTRY WILL BE AS FOLLOW :

SHARE APPLICATION A/C DR.
SHARE CAPTIAL A/C CR

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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18 April 2010 AGREE WITH MR. BANSAL.

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kartik_somu

kartik_somu (Expert)
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18 April 2010 agree with experts

CMA Arif Farooqui

CMA Arif Farooqui (Expert)
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26 April 2010 agree with experts

Venkat Rao Marella

Venkat Rao Marella (Expert)
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25 May 2010 It should be credited to Share application money because the money is not taking the character of share capital unless share are allotted against the money. So till the time u allot shares in a board meeting alloting shares to the applicant, that remains only application money.

Ramanananda

Ramanananda (Expert)
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01 November 2010 well said... by Mr bijender and venkat rao