What is the journal entry for share capital?
Solution:
| Particulars | Debit | Credit |
|---|---|---|
| Share first & final call Dr. To share capital To security premium | 69,000 | 46,000 23,000 |
| Bank A/c Dr. To share first call | 69,000 | 69,000 |
| Share second & final call Dr. To share capital A/c To security premium | 46,000 | 23,000 23,000 |
| Bank A/c Dr. To share second & final call | 46,000 | 46,000 |
How do you record a journal entry for capital?
When you record the journal, you enter the capital introduced as a credit and post the opposite debit entry to the nominal ledger account you want to affect.
The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.
The amount of share capital that shareholders owe to the company is called “called up capital”….Called Up Capital Example.
| Account | Debit | Credit |
|---|---|---|
| Receivable | 300,000 | |
| Cash | 200,000 | |
| Common stock | 100,000 | |
| Additional paid-in capital | 400,000 |
No, equity share capital is not an asset. But the investor who buys equity shares of the company brings in cash in exchange for the shares given. This increases the assets of the company. Equity shares can also be issued to vendors in the exchange of the supplies or raw material provided by them.
A debit to a capital account means the business doesn’t owe so much to its owners (i.e. reduces the business’s capital), and a credit to a capital account means the business owes more to its owners (i.e. increases the business’s capital).
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