Journal Entries Examples for Issue of Shares

Learn about the correct procedure of Journal Entries for Issue of Shares.

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(1) On receipt of application money



Bank Account


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


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 money will be returned. For the following entry will be passed.

Share Application Account


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 resolution dated…)


(4) On receipt of allotment money, the entry is

Bank A/c


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


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


To Share First Call Account

(Being share first call money…shares @ Rs….per share received)



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 account or share call amount.

As and when any amount is received or become due, it will be entered either in share application and allotment account or share call account.

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