1. SHARE CAPITAL

2. ISSUE SHARES TO PUBLIC
COMPANY
AT PAR
AT PREMIUM
AT DISCOUNT

3. SHARES ARE ISSUED AT PAR OR AT PREMIUM
APPLICATION SET
Bank A/c Dr
To Share Application A/c
(Being amount received on application)
Share Application A/c Dr
To share capital A/c
To Share Allotment A/c
To Calls in advance A/c
To Bank A/c
(Being application A/c adjusted)
In the above entry we credit share allotment, calls in advance in case of over subscription of shares than offered and adjusted against allotment and calls.
Balance amount should be refunded to applicants for which shares are not alloted. So Bank A/c is credited

4. ALLOTMENT SET
AMOUNT
Share Allotment A/c Dr
To Share capital A/c
To Securities Premium A/c
(Being share allotment money and premium on issue of shares is due )
Bank A/c Dr
To Share Allotment A/c
(Being cash received on allotment)
Allotment + premium
Allotment money
Premium amount
Share allotment money + securities premium

5. CALL SET
Share Call A/c Dr
To Share Capital A/c
(Being Call money Due)
Bank A/c Dr
Calls in Advance A/c (Adjusted) Dr
To Share Call A/c
(Being amount received on calls and calls received in advance adjusted to share call account)

6. Discount on issue of shares
Discount on issue of shares is to be debited at the time of allotment
Share Allotment A/c Dr
Discount on issue of shares A/c Dr
To Share Capital A/c
When the shares are forfeited the discount allowed on such shares is cancelled i.e., Credited
Share Capital A/c Dr
To Discount on issue
To forfeited shares A/c
To call A/c

7. FORFEITURE ENTRIES
Share Capital A/c (no.of shares forfeited * amount called towards share capital on the date of forfeiture)
Securities Premium A/c (Cancelled as amount not received)
To Forfeiture A/c (Amount paid by member towards share capital)
To Share Allotment A/c (Unpaid by member)
To Share call A/c ( Unpaid by member)
Forfeiture of shares happens when share holder fails to pay allotment money or calls on shares.
Forfeiture means company taking back right on shares from the share holder.
So we have to cancel share capital A/c what ever transferred before by debiting share capital A/c
In the above entry it is assumed that share holder failed to pay share allotment money along with securities premium and calls on shares

8. Forfeited shares can be reissue by the company
ISSUED AT PAR
Bank A/c Dr
To Share Capital A/c
ISSUED AT PREMIUM
To Securities Premium A/c
ISSUED AT DISCOUNT
Bank A/c Dr
Forfeiture A/c Dr (discount amount)
Profit on forfeited shares transferred to capital reserve after reissue.
Forfeiture A/c Dr
To Capital Reserve A/c

9. Balance forfeited shares which are not reissued should be shown separately in Balance sheet
When the shares are reissued discount A/c is debited on the reissued shares
Bank A/c Dr
Discount on Reissue of shares A/c Dr
Forfeited share A/c Dr
To Share Capital A/c