In the books of Sara 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 capital)

(i) Issued at a premium

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 Sectrrities premium A/c (10,000 x 2)				20,000
	(Application money transferred to share capital)

It is that reserve which is created out of capital profits such as profit on sale of fixed assets, profit on revaluation of assets, premium on issue of shares & debentures, etc.

This is the amount stated in the capital. Clause of the memorandum of association with which the company was registered. It is the maximum amount a company can raise during the life time.

(i) Authorised share capital
(ii) Issued share capital
(iii) Subscribed share capital
(iv) Called-up share capital
(v) Paid-up share Capital
(vi) Reserve capital

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.

(i) Allotment means acceptance by a company of the offer made by an applicant to take shares.
(ii) It is done by Board of Directors.
(iii) On allotment, the applicant becomes the shareholder or member of the company.

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.