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Incorporation accounting entries

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Rahul Jain

Accountant

131 Points Posted on 17 December 2013

Two persons wanting to incorporate a private limited company gave their CA, Rs. 1 lakh each by cheque in the CA Firm's name for Incorporation expenses. The company was incorporated with total ROC expenses of Rs 1.5 lakhs.

What should the CA Firm do with rest Rs. 50000.Should it withdraw it and give it to two directors or make cheque in the name of Company?

What entry should the two directors make in their personal books of accounts and in the books of newly incorporated company for Rs. 2 lakhs paid, since they have subscribed shares of Rs. 1 lakh each?

Replies (1)

veeru sagar

BBE M.com CA Final

202 Points Posted on 17 December 2013

Dear rahul jain

in such case first the company will issue the share of 1.5 lakh for the both director in the ratio of expenses done by the each director if the company have issue the 1 lakh capital than company can charge the security primium and may be written of these 1.5lakh expenses and the journal entry will

1. issue of share capital with the premium

2. allot the share to director

3. incorporate the preliminary expnses

4. sef off these expenses with security premium

i hope you got a clear picture about the whole senerio