Terms of Issue of Shares> Issue of Shares at Premium

1. On Receipt of Application Money:

Bank A/c               ...Dr.

       To Shares Application A/c

(Being the total application money received, including the premium)

2. On Allotment of Shares:

Shares Application A/c             ...Dr.

       To Share Capital A/c

       To Securities Premium A/c

(Being the transfer of application money to share capital and securities premium)

3. Amount Due on Allotment:

Shares Allotment A/c               ...Dr.

      To Share Capital A/c

      To Securities Premium A/c

(Being allotment money due, including premium)

4. On Receipt of Allotment Money:

Bank A/c                         ...Dr.

Calls-in-Arrears A/c        ...Dr.

      To Shares Allotment A/c

(Being receipt of allotment money; balance treated as calls-in-arrears)

5. Amount Due on First Call:

Shares First Call A/c            ...Dr.

      To Share Capital A/c

      To Securities Premium A/c

(Being first call due, including premium if any)

6. On Receipt of First Call Money:

Bank A/c                       ...Dr.

Calls-in-Arrears A/c      ...Dr.

      To Shares First Call A/c

(Being first call money received; balance treated as calls-in-arrears)

• Meaning: Shares issued above face value; excess is called securities premium.
• Nature: Securities premium is a capital receipt.
• Accounting: Credited to Securities Premium Account as per the Companies Act, 2013.
• Use: Can be used only for specific purposes, such as bonus shares, issue expenses, or redemption.
• Collection: Usually collected with allotment; credited only after shares are allotted.