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Important Points for Issue of Shares

Shares can be issued either for cash or for consideration other than cash

Shares can be issued either at par or at a premium or at a discount

Issue price is the price at which the shares are issued, which can be same as face value, more than face value (in case of issue at premium) or less than face value (in case of issue at discount)

The entire issue price can be collected either in lump sum (along with application) or in various instalments at different stages.

Issue of shares at par:

Shares are said to be issued at par when they are issued at a price equal to the face value. The various journal entries to record for such issue are summarised as under;



  • Some companies prefer to have only one account, ‘Share Application and Allotment A/c’ instead of two separate accounts as stated earlier.
  • When the type of shares is not mentioned, it is assumed to be equity shares.
  • The share application account is a personal account of applicants who have applied for shares.
  • The share allotment account is a personal account of allottees to whom the shares have been allotted.
  • Unless otherwise stated, the excess application money over and above due on allotment should be refunded to the allottees.
  • As per the SEBI guidelines, the entire subscription money should be called within 12 months from the date of allotment.


Illustration 2


A Ltd. issued 1,00,000 shares of ₹ 10 each on 1st April 2012. The amount payable on these shares were as under:

  • ₹ 2 per share on application on 10th April 2012
  • ₹ 3 per share on allotment on 20th April 2012
  • ₹ 5 per share on first and final call 31st July 2012

Pass necessary journal entries in the books of A Ltd.



Journal Entries in the Books of A Ltd.

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