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ALTERATION OF SHARE

CAPITAL
CONSOLIDATE AND SUBDIVISION OF SHARE

Increase
capital
Alteration
Change
Reduce
Issue
Consolidate
Convert
Sub-divide
Cancel
Reduce
ofof
the
share
ofshare
share
unsubscribed
period-up
new
bonus
shares
form
shares
capital
shares
share
capital
ofshare
into
share
share
stock
shares
capital
capital
& stock into share

Consolidate shares into shares


of larger amount

In consolidation, number of shares are


combined into one new share, in such
a way that the nominal value of new
share is equal to the aggregate value
of
consolidated
share
The company has to power for
consolidation
Of share of small value into shares of
higher value.
When the shares are consolidated, a
resolution has to be passed in the general
meeting of the company.

Example of consolidation of
shares
50,000 equity shares of Rs.10
each are consolidated into
5,000 equity shares of 100
Rs. Each. Pass entry.
Equity share capital A/c (Rs. 10)
Dr.
5,00,000
To equity share capital account ( Rs.100 )
5,00,000

20,000 equity shares of


Rs.10 each are consolidated
into 2,000 equity shares of
100 Rs. Each. Pass entry
Rs.6,00,000 equity shares
of 10 each consolidated in
to 100 Rs. each

SUB-DIVISION OF
SHARES

If the articles of company permit


(permission), then company can subdivide its share of bigger amt. into
shares of small amt.
If company sub-divided its share from
bigger amt. to smaller amt. then, pass
journal entry in the books of company.
1000 shares of Rs.100 each are subdivided into 10,000 shares of 10 each.
Share capital A/c (Rs.100) Dr. 1,00,000
To share capital A/c (Rs.10)
1,00,000

The share capital of a company is


divided into 20,000 fully paid shares of
Rs.50 each. The directors of the
company decided to sub-divide the
share into 3 equity share of 10 Rs. Each
and 2 pref. shares of Rs. 10 each
20,000*50=10,
00,000
30:20
3:2=5

Equity share
10,00,000*3/
5
=6,00,000

Pref. share
capital
10,00,000*2/
5
=4,00,000

Equity share capital A/c (Rs.50) Dr.10,00,000


To Equity share capital A/c
(Rs.10)
6,00,000
To Pref. share capital A/c
(Rs.10)
4,00,000

Ahmadabad transport company ltd. having a


capital of 8,000 equity shares of Rs.10 each
fully paid and resolve to sub-divide it into 7
equity shares of 10Rs. Each and 3 Pref. share
of Rs.10 each fully paid.
8000*10=80,000
70:30
7:3=10

Equity share
80,000*7/10

Pref. share
80,000*3/10

=56,00

=24,00

Equity share capital A/c


(Rs.10) Dr.80,000
To equity share capital (Rs.7)
56,000
To pref. share capital (Rs.3)
24,000

Anju ltd. With share capital of 700


equity shares of Rs. 100 each fully paid
up, decided to sub-divide the share into
5,000 equity shares of Rs.10 each and
2000 8% pref. share of Rs.10 each.

The share capital of the company


consist 50,000 eq. shares of 100 Rs
each. The company has passed
resolution to subdivide its each eq.
share of Rs.100 each into 6 eq. shares
of Rs.10 each and 8 pref. share of Rs. 5
50,000*100=50,
each.
00,000
60:40
6:4=10

Equity share
capital
50,00,000*6/1
0
30,00,000 Rs.

Prf. Share
capital
50,00,000*4/
10
20,00,000 Rs.

CONVERSION OF SHARES IN TO
Company can STOCK
convert its share

into
stock
but
before
that
company have to pass resolution
of it in company general meeting.
Company can make conversion of
its share into stock if article of
company permit it.
Company have to pass entry for
conversion into stock as under,
Dr.

Equity share capital A/c

Equity Stock

Discoun
t on
issue of
stock

Equity share

Eq. share capital a/c


Dr.
Discount on issue of stock a/c
Dr.
To eq. stock A/c
A company convert its 10 eq.
shares of rs.10 each into eq.
stock of Ra.105. the entry as
under:
Eq. share capital a/c
Dr.
100
Discount on issue of stock a/c
Dr.
05
To eq. stock A/c
105

Equity share

Eq. share capital a/c


DR.
To eq. stock A/c
To Premium on
issue of stock a/c
A company convert its 10 eq.
shares of rs.10 each into eq.
stock of RS.95. the entry as
under:

Premiu
m on
issue
of
stock

Equity Stock

Eq. share capital a/c


Dr.
100
To eq. stock A/c
95
To Premium on issue of
stock a/c 05