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Reserves and Surplus

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Question

share allotment to share capital (allotment money due)
here, why is share allotment debited?

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Solution

Hi Swarnima,

Share Allotment is a personal account. They represent the debtors of the company as money is due from them. Thus, when allotment money is made due, it is debited (being increase in debtors) and at the time of receipt of money, these are credited.
Moreover, they also represent contribution from the shareholders towards the capital therefore should be ultimately credited to Share Capital Account. Thus, when a call is due, Share Allotment/Call A/c is debited and the amount is transferred to Share Capital Account by crediting Share Capital Account.

Hope this clarifies your doubt!

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