Accounting for Share Capital Class 12 TS Grewal Solutions Explained

Introduction to Accounting for Share Capital in Class 12

Accounting for share capital is a vital chapter in the Class 12 Accountancy syllabus, especially following the NCERT and TS Grewal textbooks. It deals with how companies raise funds by issuing shares and how these transactions are recorded in the books of accounts. Understanding this chapter helps students grasp the financial structure of companies and prepares them for board exams.

Key concepts include types of shares, share capital, calls on shares, forfeiture, and reissue of shares. TS Grewal solutions provide detailed explanations and solved examples that simplify these topics for Class 12 students.

Types of Share Capital and Their Accounting Treatment

Share capital is the amount raised by a company through issuing shares to shareholders. It is broadly classified into:

• Authorized Share Capital: Maximum capital a company can raise.
• Issued Share Capital: Shares actually issued to investors.
• Subscribed Share Capital: Shares accepted by investors.
• Called-up Share Capital: Amount called from shareholders.
• Paid-up Share Capital: Amount actually received.

Accounting Treatment

TS Grewal solutions include journal entries for each stage, helping students practice and understand the flow of transactions.

Journal Entries for Share Issuance and Calls

Accounting for share capital involves recording various transactions through journal entries. The main entries include:

• On Application: When investors apply for shares.
• On Allotment: When shares are allotted.
• On Calls: When calls are made on shares.

Example:

A company issues 10,000 equity shares of ₹10 each at par. The payment is made in two stages: ₹6 on application and ₹4 on allotment.

Journal Entries:

TS Grewal solutions provide similar examples with stepwise entries, aiding Class 12 students to master the topic.

Handling Calls in Arrears and Calls in Advance

In share capital accounting, calls in arrears and calls in advance are common scenarios:

• Calls in Arrears: When shareholders fail to pay the amount called.
• Calls in Advance: When shareholders pay before the call is made.

Accounting Treatment:

• Calls in arrears are shown as a deduction from calls in the balance sheet.
• Calls in advance are shown as a current liability.

Journal Entries:

• Calls in arrears: No entry until forfeiture; shown in notes.
• Calls in advance:

• Debit Bank A/c
• Credit Calls in Advance A/c

TS Grewal solutions explain these concepts with examples, helping students understand the impact on financial statements.

Forfeiture and Reissue of Shares: Concepts and Entries

Forfeiture occurs when a shareholder fails to pay calls, and the company cancels their shares. Reissue means selling these forfeited shares to new investors.

Forfeiture Journal Entry:

• Debit Share Capital A/c (called-up amount)
• Credit Share Forfeiture A/c (amount received)
• Credit Calls in Arrears A/c (unpaid amount)

Reissue Journal Entry:

• Debit Bank A/c (amount received)
• Debit Share Forfeiture A/c (discount allowed)
• Credit Share Capital A/c (nominal value)

Example:

A shareholder holding 100 shares of ₹10 each fails to pay the final call of ₹2 and shares are forfeited. Later, shares are reissued at ₹8 per share.

TS Grewal solutions provide detailed stepwise entries and calculations to clarify this process.

Practical Tips to Use TS Grewal Solutions Effectively

TS Grewal solutions are a trusted resource for Class 12 Accountancy students. To maximize their benefits:

• Understand Concepts: Read theory before attempting solutions.
• Practice Examples: Solve all examples step-by-step.
• Attempt Exercises: Complete NCERT exercises using TS Grewal as a guide.
• Revise Regularly: Use solutions for quick revision before exams.
• Focus on Journal Entries: Master these as they are frequently tested.

By following these tips, students can improve accuracy and speed in solving accounting problems related to share capital.