Bonus shares - capitalisation

mounica (student) (143 Points)

02 May 2014  

dear friends

my query is...

if in B/S both General Reserve and P & L is exist....

and

if in adjustments, Bonus Shares are issued by Capitalization of Profits..... 

which of the following is correct....

is it from General Reserve

OR

is it from P & L

1. General Reserve       A/c    Dr

          To Bonus Shares 

                 OR

2. P & L A/c                  Dr

          To Bonus Shares 

 

(whether to Debit to General Reserve OR to Debit to P & L)