Issue of Shares: Accounting Entries on Full Subscription with Share Application (original) (raw)
Last Updated : 10 Jun, 2026
A share is a unit or equal portion of a company's share capital that represents ownership in the company and is evidenced by a share certificate. In simple terms, shares are the denominations into which the capital of a company is divided. For example, if ABC Ltd. has a share capital of ₹10,00,000 divided into 10,000 units of ₹100 each, each unit of ₹100 is called a share. To distinguish one share from another, each share is assigned a unique number. Shares are movable property and can be transferred according to the provisions contained in the Articles of Association of the company. According to the Companies Act, 2013, a share means a share in the share capital of a company and includes stock, except where a distinction between stock and shares is expressly or impliedly made.
Full Subscription:
Full subscription occurs when all the shares offered by a company to the public are applied for and subscribed. In other words, the number of shares applied for by investors is exactly equal to the number of shares issued by the company. Since the entire issue is subscribed, the company can proceed with the allotment of shares without any reduction or adjustment. Full subscription indicates a favourable response from investors and enables the company to raise the intended amount of capital successfully: The Journal Entries passed in the books of the company are as follows:
**1. When shares are issued at Par (If the Face Value of Shares is ₹10 each):
**Or
**A single entry can be passed:
**2. When shares are issued at Premium (If the Face Value of Shares is ₹10 each at 10% Premium; i.e., 10 + 1 = ₹11):
**Or
**A single entry can be passed:
**Illustration 1:
Vishal Ltd. issued 20,000 shares of ₹10 each and received applications in full; i.e., for 20,000 shares. Pass the Journal Entries for the same when:
a) Shares are issued at Par
b) Shares are issued at 25% Premium
**Solution:
**a) Shares are issued at Par:
**Or
**A single entry can be passed.
**b) Shares are issued at 25% Premium:
**Or
**A single entry can be passed.
**Illustration 2:
Ankit Ltd. invited applications for 10,000 equity shares of ₹20 each at a premium of ₹3 per share and received applications in full. The whole amount was payable on application. Pass necessary Journal Entries in the books of Ankit Ltd., and prepare a Balance Sheet for the same as on 31st March 2022.
**Solution:
**Or
**A single entry can be passed:
**Notes to Accounts:
