Working Capital


Joseph Samuel (Accountant)     10 November 2019

Joseph Samuel
Accountant 
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Dear Sir/Madam,

I need a clarification over rising of working capital in a Pvt. Ltd. company.  If a Pvt. Ltd. company requires some cash to run its day to day process, then we call that requiring amount as working capital isn't. Here what is the journal entry should we pass, if an Managing Director of the firm brings cash into business through the registered bank? Take an example ABC Pvt. Ltd. has Rs. 5,00,000/- authorised capital. It's paid up capital is Rs. 5,00,000/- (fully utilised). Now the Mr. Z (Managing Director) brings cash of Rs. 1,00,000/- into business as working capital. Now what is the journal entry? In fact my main doubts are, 1) if I make a journal entry like Bank A/C 'Dr' and Capital A/C 'Cr' doesn't it cross the authorised capital limit? 2) Can I pass a journal entry like Bank A/C 'Dr' and Loan from Director/Mr. Z A/C 'Cr'? Kindly throw some light over this. Please.

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sabyasachi mukherjee   13 November 2019

sabyasachi mukherjee

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Infusion of capital into business for running the business is as per norms of partnership agreement.

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Kapadia Pravin   13 November 2019

Kapadia Pravin

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As proposed by you,

You can pass  a journal entry like Bank A/C 'Dr' and Loan from Director/Mr. Z A/C 'Cr'

----
It's Pvt Ltd Co. sanyasachi,. not partnership firm

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sabyasachi mukherjee   15 November 2019

sabyasachi mukherjee

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Pvt limited co. can also be partnership.
I am telling you the modalities.
there are procedures.
do not create a chaos always..

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Pravin Kapadia   15 November 2019

Pravin Kapadia

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This forum is for a suitable reply for the query. If have no answer for query then it's ok. Skip it. It's bad to misuse Forum for whimsical posts without query reply.

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sabyasachi mukherjee   15 November 2019

sabyasachi mukherjee

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@ Joseph
you cannot raise your capital above the authorised share capital but, if the board of director proposes there can always be a fresh capital infusion by raising the paid up capital just below the authorised capital.But here your authorised cap and paid up is same.
This is advisable when u will be executing a project.
Otherwise arrange for a working capital loan by hypothecating your stocks.
Avoid partners loan ./directors loan.
But, I would prefer figures and numbers.

@ Joseph
if you want real help..
send your mail.
sorry for my earlier reply.
I have not gone through it thoroughly.



@ kapu I think
passing a journal entry is not all a issue.
two accounts are effected.
This forum should not be for passing journal entries...
remain quite ...
answers ...
no whimsical posts please.

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Pravin Kapadia   15 November 2019

Pravin Kapadia

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Sanyasachi all bluff stuff dumping. G8. 

JV reply is as per query.  you call your JV reply Golden Rule.   Too embarrassing. Worthless ????  

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sabyasachi mukherjee   18 November 2019

sabyasachi mukherjee

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@ KAPU
WORTHLESS
STOP....

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Kapadia Pravin   18 November 2019

Kapadia Pravin

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Hope you will soon stop being root cause. sanyasachi


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