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my boss (Managing Partner of a firm) promoted along with
his wife a private limited company. he and she spent some
Rs. 75,000/- (approx) for the promotion of the company. i
know that they usually fall under the head of preliminary
expenses. but after receiving the certification of
incorporation of the company how shall i repay them to the
promoters i.e. what is the accounting entry in the books
(initial books of accounts) for the expenditure incurred.
they have kept in hand 5,00,000/- each to meet the expenses
and they were allotted shares of equal to the amount. can i
allot shares for a consideration of cash from and excluding
the preliminary expenses. can i take cash towards the share
application money (being the cash more than Rs. 20,000/-)
as the company has not opened a bank account yet. please
give me the detailed answer with journal entries that can
be entered in tally. thank you.
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Answer Posted / Neeraj Chauhan
To repay your boss and his wife for the promotional expenses, you will need to record this expense under preliminary expenses in your initial books of accounts. Here are the journal entries that you can make in Tally:nn1. **Party Ledger -> Dr: Bank A/c (if cash is available) / Cr: Cash A/cnCreditors A/c -> Dr: Preliminary Expenses A/c -> Rs. 75,000/-n**n2. **Preliminary Expenses A/c -> Dr: Capital Reserve A/c -> Rs. 75,000/nCapital A/c -> Cr: Preliminary Expenses A/c -> Rs. 75,000/**nnFor the allotment of shares, you can follow these steps:nn1. First, determine the face value and number of shares to be allotted.n2. Record the allotment of shares in the Share Capital Account under the Debit side.n3. Record the receipt of share application money in the Cash Account or Bank Account under the Credit side.n4. Update the Share Ledger with the details of the allotted shares.
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