Write a short note on issue of bonus shares. Provide proforma journal entries.

A company may issue fully paid-up bonus shares to its members, in any manner, out of Free reserves Securities premium account Capital redemption reserve account However, no issue of bonus shares shall be made by capitalizing reserves created by the revaluation of assets. No company shall capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares under above, unless- It is authorized by its articles. It has, on the recommendation of the Board, been authorized in the general meeting of the company. It has not defaulted in payment of interest or principal in respect of its deposits or issued debt securities. It has not defaulted in respect of the payment of statutory dues of the employees, such as contribution to provident fund, gratuity and bonus. The partly paid-up shares, if any outstanding on date of allotment, are made fully paid up. The company which has once announced the decision of Board recommending a bonus issue, shall not subsequently withdraw the same. Bonus shares shall not be issued in lieu of dividend. Journal entries for issue of Bonus Share On capitalization of reserve for the issue of shares Profit & Loss A/c Dr. General Reserve A/c Dr. Capital Reserve A/c (Realized in cash only) Dr. Securities Premium A/c Dr. Capital Redemption Reserve A/c Dr. To Bonus to Shareholders A/c On Issue of bonus shares Bonus to Shareholders A/c Dr. To Share Capital A/c