Reserve & surplus

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Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2016 Dear Experts, plz let me know what is the reserve & surplus it's use & importance... Thanx in advance

Amol S Joglekar

Amol S Joglekar (Expert)
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25 January 2016 In the case of Company, the profit for the year, after appropriation is kept under Reserves and Surplus. As the name indicates, it acts as the Reserve.

Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2016 sir plzz clarify my two query..1) what is appropriation..2) if profit is to be kept in reserve & surplus then what is use general reserve..

Amol S Joglekar

Amol S Joglekar (Expert)
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25 January 2016 01. The profit is distributed by way of dividend etc. The word used is Appropriation.
02. General is the adjective of the word Reserve. The reserve which is available for General purpose i8s termed as general reserve. There can be the examples of earmarked reserves like dividend equalisation reserve, debenture redemption reserve, investment allowance reserve etc.

Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2016 sir, where company profit will be trf weather in reserve & surplus or in general reserve..

Amol S Joglekar

Amol S Joglekar (Expert)
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25 January 2016 The board of directors have to recommend this and the members of the company have to give approval for the same. Although there is no any MODEL or SPECIFIC procedure for such a transfer, you can have look at various balance sheets to get a proper feel of the same.
If anything is required to be transferred under any LAW for the time being in force, the company is duty bound to do so. The remainder is transferred to general reserve. Some companies show it as the balance in the Profit and Loss Account under reserves and surplus. So to say it is purpose specific rather than item specific.

Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2016 ok sir one more query.. plz sort it out.. A listed company has issued it's share in public my query is will this listed company kept the record of share issued in public or not if not then who will kept..

Amol S Joglekar

Amol S Joglekar (Expert)
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25 January 2016 The company is duty bound to keep the record of its members.(Share holders) In case of big sized companies, this work is off loaded to share transfer agents and share registrars like Karvy, Tata, Sharepro etc.

Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2016 sir assume if a company having autorised capital Rs. 50 lacs and it has issued capital of rs. 40 lacs fully paid please let me know the journal entry for the same...

Amol S Joglekar

Amol S Joglekar (Expert)
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25 January 2016 assuming you are aware of the distinction between "issued", "subscribed" "paid up" etc.
when capital is issued, the entry to be passed is
debit share allottment A/c
credit share capital A/c
(This answer is based on certain assumptions. It seems that you are getting annoyed with some of your commerce consultant. Please give the details so as to answer the query in its right perspective)

Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2016 sir... i am going to work in newly incorporated pvt. ltd. company therefore i am confused about capital entry of pvt. company.. plzz tell me assume this pvt. company is registered by 1 lacs authorised capital however it has issued capital rs. 80000 fully paid, plzz let me know the complete accounting entry since it's incorporation...

Amol S Joglekar

Amol S Joglekar (Expert)
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25 January 2016 I also though so.... because you are using the words soooooo loosely..... private, public....my goodness. See let me tell you one simple thing.... Please e mail me your query on my e mail id amolshankar@gmail.com
ok? I will be in a better position to answer.

Querist : Anonymous

Querist : Anonymous (Querist)

26 January 2016 sir i had tried to mail you my query but due to some problem it can't be delivered.. sir my query is very simple assume A pvt. ltd. company been incorporated by 1 lacs autorized capital and 80 thousand is issued capital fully paid.. query.1) weather any entry will be passed of authorized capital of 1 lacs or not if yes what..2) 80 thousand out of 1 lacs is issued capital which is fully paid what entry will be pass of this issued capital...

Amol S Joglekar

Amol S Joglekar (Expert)
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27 January 2016 01. No entry is required to be passed for Authorised Capital.
02. debit cash account or bank account as the case may be AND credit Share Capital Account.
Mind you , this entry needs to be passed on the date on which the share capital is issued and subscribed. Please take this date seriously and carefully.

Querist : Anonymous

Querist : Anonymous (Querist)

27 January 2016 sir assume.. if paid up capital is 60000/- and issued capital is 80000 then No entry will be passed of issued capital only paid up capital's entry is to passed, bank dr.... 60000 to equity share capital...60000, is it correct.....

Amol S Joglekar

Amol S Joglekar (Expert)
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27 January 2016 Absolutely correct. No entry is required to be passed for ISSUED capital
It is disclosed in the Balance Sheet under Capital
Authorised Capital
Issued Capital
Subscribed Capital
Paid up Capital.

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