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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.

Memorandum Journal
Memo entry (In general Ledger) Unissued Share Capital xx
Authorized Share Capital

Subscription receivable xx
Subscribed Share Capital xx

Issuance of Certificate
Subscribed Share Capital xx Subscribed Share Capital
Share Capital xx Unissued Share Capital xx

Treasury Shares xx
Cash xx

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

Unissued share Capital
Share Premium

Journal entry for Net Income

Income Summary xx
Accumulated Profits xx

XX Corporation
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

Xx Corporation

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
Accumulated Profits
Cash dividends Payable Date of Payment
Cash Dividends Payable

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

a. The shares must be owned by the issuing corporation
b. The shares must be originally issued
c. The shares must be at cost
Treasury Shares 150k
Cash 150k
Ignore par and fair value
Corollary Entry
Unappropriated(Accumulated Profits)
Appropration reserve for ts
B. Reissuance
Treasury Shares(@cost)
Share Premium