Q.Sunrise Papers Ltd issued 10,000 equity shares of ₹10 each, payable ₹3 on application, ₹4 on allotment and ₹3 on first and final call. All the shares were subscribed and all money was duly received. Pass the necessary journal entries in the books of the company.

Based on price, shares are issued in three ways — at par (price = face value), at a premium (price above face value), and at a discount (price below face value). Premium is credited to a Securities Premium Account; issue at a discount is now largely prohibited except for sweat equity shares.

This is a standard AP Inter 2nd-year (Commerce) company-accounts theory question, aligned with the NCERT/CBSE commerce curriculum.

1. Issue of shares at par — The shares are issued at a price exactly equal to their face (nominal) value. For example, a share of ₹10 face value issued for ₹10. No premium or discount arises, and the whole amount is credited to Share Capital.

2. Issue of shares at a premium — The shares are issued at a price higher than their face value. A ₹10 share issued at ₹13 carries a premium of ₹3. The premium is not part of capital; it is credited to the Securities Premium Account and can be used only for purposes allowed by the Companies Act (such as issuing bonus shares, writing off preliminary expenses, or buy-back of shares).

3. Issue of shares at a discount — The shares are issued at a price lower than their face value, for example a ₹10 share issued at ₹9 (a ₹1 discount). Under the Companies Act, 2013 a company is generally prohibited from issuing shares at a discount; the main exception is sweat equity shares issued to employees or directors for their know-how or services.

(Where the syllabus also discusses the mode of issue, shares may further be issued for cash or for consideration other than cash, and by way of public issue, rights issue, bonus issue or private placement — but the main classification expected here is by price: par, premium and discount.)

A company's shares can be issued in three ways depending on the price charged against face value: at par (price = face value), at a premium (price above face value) and at a discount (price below face value). The premium is credited to the Securities Premium Account; a discount (now rarely allowed) is a loss shown separately.

This is a company-accounts theory question from the AP Inter 2nd-year (Class 12) Accountancy previous-year paper; the AP commerce syllabus aligns with the NCERT/CBSE treatment of share issues.

Types of issue of shares (based on issue price)

1. Issue of shares at par: Shares are issued at a price exactly equal to their face (nominal) value. For example, a share of face value 10 is issued for 10. The whole amount received is credited to the Share Capital Account.

2. Issue of shares at premium: Shares are issued at a price higher than their face value. The excess of the issue price over the face value is the premium, credited to the Securities Premium Account. For example, a 10 share issued at 13 carries a premium of 3. The premium can be used only for the purposes allowed by law (e.g. issuing bonus shares, writing off preliminary expenses, buy-back).

3. Issue of shares at discount: Shares are issued at a price lower than their face value. The shortfall is the discount, which is a capital loss shown on the assets side / written off over time. (Under the present Companies Act the issue of equity shares at a discount is generally not permitted, except sweat equity shares.)

In addition, by the mode of issue, shares may be issued for cash or for consideration other than cash, and through a public issue, rights issue, private placement or bonus issue; but the primary classification for this syllabus is at par, at premium and at discount.