In the books of Y company Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c (10,000 x 10)	Dr.		1,00,000
	To Equity share application A/c				1,00,000
	(Application money received)
	Equity share application A/c	Dr.		1,00,000
	To Equity share capital A/c				1,00,000
	(Application money transferred to share capitals)

(ii) Issued at a premium

In the books of Y company Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c (10,000 x 12)	Dr.		1,20,000
	To Equity share application A/c				1,20,000
	(Application money received)
	Equity share application A/c	Dr.		1,20,000
	To Equity share capital A/c (10,000 x 10)				1,00,000
	To Securities premium A/c (10,000 x 2)				20,000
	(Application money transferred)

In the books of Thai Ltd Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		2,50,000
	To Equity share application Ale				2,50,000
	(Application money received)
	Equity share application A/c	Dr.		2,50,000
	To Equity share capital A/c				2,50,000
	(Transfer of share application money to share capital)
	Equity share allotment A/c	Dr.		1,00,000
	To Equity share capital A/c				1,00,000
	(Share allotment money due)
	Bank A/c	Dr.		1,00,000
	To Equity share allotment A/c				1,00,000
	(Allotment money received)
	Equity share first call A/c	Dr.		1,00,000
	To Equity share capital A/c				1,00,000
	(Share first call money due)
	Bank A/c	Dr.		1,00,000
	To Equity share first call A/c				1,00,000
	(Share first call money received)
	Equity share second and final call A/c	Dr.		50,000
	To Equity share capital A/c				50,000
	(Share second and final call money due)
	Bank A/c	Dr.		50,000
	To Equity share second and final call A/c				50,000
	(Share second and final call money received)

Journal Entries in the Books of Preeti Ltd.

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		5,20,000
	To Preference Share Capital A/c				4,00,000
	To Share Premium A/c				1,20,000
	(40,000 preferences shares issued @ Rs.10 per shares with premium of Rs.3)

	Basis	Equity shares	Preference shares
1.	Meaning	Equity shares are the ordinary share of the company representing the part ownership of the shareholder in the company.	Preference shares are the shares that carry preferential rights on the matters of payment of dividend and repayment of capital.
2.	Payment of dividend	The dividend is paid after the payment of all liabilities	Priority in payment of dividend over equity shareholders.
3.	Rate of dividend	Fluctuating	Fixed
4.	Voting rights	Equity shares carry voting rights	Normally, preference shares do not  carry voting rights
5.	Convertibility	Equity shares can never be converted	Preference shares can be converted into equity shares.

(i) When final call money is not paid

In the books of Keerthiga Company Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Equity share capital A/c (50 × 10)	Dr.		500
	To Equity share second and final call A/c (50 × 3)				150
	To Forfeited shares A/c (50 × 7)				350
	(50 shares forfeited)

Note: Since the premium amount is received by the company, premium should not be cancelled
(ii) When allotment, first call money and second and final call money is not paid

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Share capital A/c (50 × 10)	Dr.		500
	Share premium A/c (50 × 1)	Dr.		50
	To Share allotment A/c (50 × 3)				150
	To Share first call A/c (50 × 3)				150
	To Share second and final call A/c (50 × 3)				150
	To Shares forfeited A/c (50 × 2)				100
	(50 shares forfeited)

(iii) When allotment and first call money is not paid

Date	Particulars		L.F	Debit Rs.	Credit Rs.
	Share capital A/c (50 × 7)	Dr.		350
	Share premium A/c (50 × 1)	Dr.		50
	To Share allotment A/c (50 × 3)				150
	To Share first call A/c (50 × 3)				150
	To Shares forfeited A/c (50 × 2)				100
	(50 shares forfeited)

In the books of Thai Ltd. Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		5,00,000
	To Equity share application A/c				5,00,000
	(Application money received)
	Equity share application A/c	Dr.		5,00,000
	To Equity share capital A/c				5,00,000
	(Transfer of share application money to share capital)
	Equity share allotment A/c	Dr.		2,00,000
	To Equity share capital A/c				2,00,000
	(Share allotment money due)
	Bank A/c	Dr.		2,00,000
	To Equity share allotment A/c				2,00,000
	(Allotment money received)
	Equity share first call A/c	Dr.		2,00,000
	To Equity share capital A/c				2,00,000
	(Share first call money due)
	Bank A/c	Dr.		2,00,000
	To Equity share first call A/c				2,00,000
	(Share first call money received)
	Equity share second and final call A/c	Dr.		1,00,000
	To Equity share capital A/c				1,00,000
	(Share second and final call money due)
	Bank A/c	Dr.		1,00,000
	To Equity share second and final call A/c				1,00,000
	(Share second and final call money received)

The share capital of a company is divided into the following categories:
(i) Authorised capital
It means such capital as is authorised by the memorandum of association. It is the maximum amount which can be raised as capital. It is also known as registered capital or nominal capital.
(ii) Issued capital
This represents that part of authorised capital which is offered for subscription.
(iii) Subscribed capital It refers to that part of issued capital which has been applied for and also allotted by the company.
(iv) Called up capital It refers to that part of subscribed capital which has been called up by the company for payment.
(v) Paid up capital
It is that part of called up capital which has been actually paid by the shareholders.
(vi) Reserve capital
The company can reserve a part of its subscribed capital to be called up only at the time of winding up. It is called reserve capital.

Following are the characteristics of a company:
(a) Voluntary association: A company is a voluntary association of persons. No law can compel persons to form a company
(b) Separate legal entity: Company is an artificial person. It has a separate legal entity which is separate and distinct from its members.
(c) Common seal: A company may have a common seal which can be affixed on the documents.
(d) Perpetual succession: A company continues for ever. Its continuity is not affected by the changes in its members. It can be wound up only by law.
(e) Limited liability: The liability of the shareholders of the company is limited to the extent of face value of the shares held by the shareholders.
(f) Transferability of shares: The shares of a company are freely transferable except incase of a private company.

The direction of a company have an authority of reissue of shares once forfeited by them due to non-payments of calls. They can rreissue the forfeitedshares at par, at premium or at discount. When forfeited shares are reissued at a premium, the amount of such premium will be credited to securities premium account.
If the reissue price is more than the amount. Unpaid on forfeited shares it results in profit and is transferred to capital reserve account.

In the books of Anu Company Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Equity share capital A/c (200 × 10)	Dr.		2,000
	To Equity share final call A/c (200 × 3)				600
	To Forfeited shares A/c (200 × 7)				1,400
	(200 shares forfeited)
	Bank A/c (200 × 6)	Dr		1,200
	Forfeited shares A/c (200 × 4)	Dr		800
	To Share capital A/c (200 × 10)				2,000
	(Forfeited shares reissued)
	Forfeited shares A/c (1,400-800)	Dr.		600
	To Capital reserve A/c				600
	(Gain on reissue of forfeited shares transferred to capital reserve account)

Under subscription Over subscription 1. In under subscription all the shares offered
may not be taken up by the public. In over subscription all the shares
offered are taken up by the public 2. The shares cannot be allotted, if the
minimum subscription is not received Here all shares are subscribed, so
there is no question of minimum
subscription 3. Under subscription does not require any
special treatment in journal entries. In over subscription additional journal
entries are required for rejection and
adjustment of application money

(i) In the case of over subscription, the shares are allotted to the public with certain number lesser than the number of shares they applied for, in certain basis.
(ii) It is called pro - rata allotment.

According to Lord Justice Lindley, A company is an association of many persons who contribute money or money's worth to - a common stock and employ it in some trade or business and who share the profit and loss arising there from. The common stock so contributed is denoted in money and is the capital of the company. The persons who contributed in it or form it, or to whom it belongs, are members. The proportion of capital to which each member is entitled is his share.

When a company issues shares at a price more than the face value (nominal value), the shares are said to be issued at premium. The excess is called as premium amount and is transferred to securities premium account. Securities premium account is shown under reserves and surplus as a separate head in the Note to Accounts to the balance sheet.