Regarding Accounting treatment of initial capital in Private Limited Co.

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This discussion addresses the accounting treatment for an individual investing Rs. 10 lakhs to establish a new Private Limited Company from their existing Sole Proprietorship. It clarifies how to record this initial share capital both in the books of the Sole Proprietorship as an investment and within the Private Limited Company's accounts under 'Share Capital'.

Francis George

Francis George (Querist)
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08 August 2023 Hello, could anyone help me in this query,

An Individual who runs a Proprietorship business started a Separate Private Limited Company as a Managing Director in which he invested Rs. 10 lakhs for new account opening of Private limited company as his part of his share capital. How to record the initial share investment made in following:

1) In the Books of Sole Proprietorship Accounts &
2 ) In the books of Private Limited Co. initial capital introduced by a Managing Director.

What are the accounting treatment & under which heads the respective accounts should be created.