Shareholders Equity
Definition of Terms
Artificial being assumes by the law it Limited liability there is a protection
as a person so that it can perform of personal assets for shareholder
practically all business functions. because when a corporation becomes
bankrupt, they are not liable for the
Created by Operation of Law and not corporations unpaid debts.
come into existence by mere
agreement of parties. Transferability of shares a
shareholder sells his acquired share
Power of Succession The share of even without the knowledge of all
stock can be transferred from one stockholders.
person to another.
Continued Life existence a
Ownership interest assumes that corporation operates initially for 50
share capital is divided into several years renewable for another term.
shares of stocks.
Authorization
Memorandum Journal
Memo entry (In general Ledger) Unissued Share Capital xx
Authorized Share Capital
xx
Subscription
Subscription receivable xx
Subscribed Share Capital xx
Issuance of Certificate
Subscribed Share Capital xx Subscribed Share Capital
xx
Share Capital xx Unissued Share Capital xx
Reacquisition
Treasury Shares xx
Cash xx
Retirement
Share Capital xx Unissued Share Capital xx
Treasury Shares xx Treasury Shares xx
Share Subscription When Fully Paid
Proforma Entry
Subscription Receivable 25% Cash xx
Subscribed Share Capital 25% Subscription Receivable xx
Cash 25% Subscribed Share Capital xx
Subscription Receivable 25% Unissued Share Capital xx
Note: Any excess shall be credited to Share Premium
Cash
Unissued share Capital
Share Premium
Journal entry for Net Income
Income Summary xx
Accumulated Profits xx
Memo
XX Corporation
SHE
As of January 31, 200x
Share Capital, xx Par, xx Share Authorized, Issued xx Shares xx
Subscribe share capital, xx Shares xx
Subscription Receivable (xx) xx
Share Premium xx
Accumulated Profits xx
Shareholders Equity xx
Journal
Xx Corporation
SHE
Authorized Share Capital, xx Par, xx Shares xx
Unissued Share Capital, xx Shares (xx)
Issued Share Capital xx
Subscribed Share Capital, xx Share xx
Subscription Receivable (xx) xx
Share Premium xx
Accumulated Profits xx
Shareholders Equity xx
Noncurrent asset 1. FMV of property Received
Share Capital 2. FMV issued
Share Premium(if excess) 3. Par Value of Share Capital Issued
If Service Below Par or Stated Value
Expense Land
Share Capital Discount on Share Capital
Share Premium Share Capital
Outstanding = Issued + Subscribed Treasury
Legal Capital
If Par issued + Subscribed
If No Par issued + Share Premium + Subscribed
Cash Dividends Ordinary Shares
Date of Declaration Date of Record
N/A
Accumulated Profits
Cash dividends Payable Date of Payment
Cash Dividends Payable
Cash
Inventory as Dividends Note: If increase
Date of Declaration
Accumulated earnings Date of Payment
Property dividends payable Accumulated Profits
Property dividends payable
Reporting period Note: If Increase
Accumulated Profits
Property Dividends Payable Property dividends payable
Inventory Gain on div dis
Share Capital
Date of Declaration Payment
Accumulated Profits Share dividend Distributable
Share Dividends dist. Share Capital
Share premium
Treasury Shares
a) Acquisition
b) Reissuance
c) Retirement
A. C, Corp
OS, 10,000 @ 10 par 100,000
Share Premium os 20,000
Retained Earnings 30,000
150,00
Requisites
a. The shares must be owned by the issuing corporation
b. The shares must be originally issued
c. The shares must be at cost
Ex.
Treasury Shares 150k
Cash 150k
Ignore par and fair value
Corollary Entry
Unappropriated(Accumulated Profits)
Appropration reserve for ts
B. Reissuance
Cash
Treasury Shares(@cost)
Share Premium
C.
