Issue of shares- Accounting Treatment

when company needs capital to finance business or run business activities it goes to public and issue shares to generate amount from the public and people contribute the amount in share capital of the company by means of there shares in share capital of company this process is called issue of shares.

Journal Entries for the issue of shares are as follows:
(1) On receipt of application money
Bank Account Dr
To Share Application A/c
(Being the application money on....shares..@ Rs..per share)
(2) On allotment of shares
(a) First of all application money on allotted shares is transferred to shares capital account by passing the following entry.
Share Application Account Dr
To Share Capital A/C
(Being the application money transferred to Share Capital Account)
( b) Those applicants who could not be allotted any share, their application moneywill be returned. For the following entry willbe passed.
Share Application Account Dr
To Bank Account
(Being the application money of shares returned).
(3) On the allotment of share, the allotment money becomes due to the company. For this, the company will pass the following entry
Share Allotment Account
To Share Capital Account
Being the Share allotment money due on ....share @ Rs...per share as per resolutiondated...)
(4) On receipt of allotment money, the entry is
Bank A/c Dr
To Share Allotment A/c
(Being the receipt of allotment money)
(5) On making the first call due from shareholders the entry is
Share First Call Account Dr
To Share Capital Account
(Being the first call money due on... shares @ Rs...per shares as per resolution of the Directors dated.....)
(6) On receipt of the first call money, the entry is
Bank Account Dr
To Share First Call Account
(Being share first call money...shares @ Rs....per share received)
Note:
Similar entries will be passed for second call, third and final call, if any.
Any amount received from or paid to any shareholder ins not to be credited or debited to shareholder account but collectively it will be either debited or credited to share application account, share allotment accountor share call amount.
As and when any amount is received or become due, it willbe entered either in share application and allotment accountor share call account.