Joseph Samuel (Accountant) 10 November 2019
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.
sabyasachi mukherjee 15 November 2019
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.
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 ...
no whimsical posts please.