Transferring advance from shareholders to paid up capital

1. any expenditure which is incurred during the period of pre incorporation period is called preliminary exp. these expenditure is to be recognised at Statutory General meeting.  

when recognised entry is :

Preliminary exp a/c Dr.            XXX

       To Promoters a/c                             XXX

2. any amounts paid by subscribers on behalf of company, before incorporation is called promoters contribution. these advance are approved by director as on Statutory general meeting.  

entry is:

Promoter's contribution a/c    Dr.   XXX

          To Promoters a/c                            XXX

3. amount can be settle to promoters by issue of shares or by cash. but practically at the initial stage company does not have resources in cash. usually company will settle in the form of shares.

Promoters A/c     Dr             XXX

      To Equity Share Capital                    XXX