PART 1: PARTNERSHIP FORMATION
NATURE OF PARTNERSHIP- by contract
of co-partnership, two or more person
may continue may contribute money,
PPE, or industry to a common fund with
the intention of dividing the profits
among themselves.
-Two or more person may also form a
partnership for the exercise of a
profession
A partnership is characterized by the
following
Voluntary agreement- perfected by
mere consent, that is upon express or
implied agreement of two or more person.
Mutual contribution of money,
property, or industry to a common
fund- in order to become a partner in a
partnership, one must contribute money
and/ r property to a common fund .
-Without the element of mutual
contribution, there can be no
partnership.
Co-ownership of property- No partner
owns any particular piece of partnership
property.
Mutual Agency- partnership is legally
held responsible for the acts of any
partner as long as those acts relate to the
normal partnership activities.
-Partnership is not bound by an act
committed by any of the partners that is
considered beyond the scope of the
partnership business.
Unlimited liability- Each partner is held
personally liable for all the debts of the
firm.
-When all partnership assets are
exhausted and there are still partnership
obligations that have not been settled, the
partnership creditor can claim from the
personal assets of the partners.
Limited Life- Legal life of the
partnership terminates with the
admission of a new partner, death,
bankruptcy, withdrawal pf any partner,
voluntary dissolution by the partners, or
by involuntary dissolution such as
through bankruptcy proceedings.
- A partnership may also come to an
end upon the completion of the
objective or goal for which the
partnership was formed.
Division of profits among partners-
primary purpose of a partnership is to
earn profits and to divide the same
among the partners in conformity with
the terms of partnership agreement.
Articles 1771 and 1772 of the New Civil
Code require the partnership contract to be
in the public instrument when immovable
property or real rights are contributed
there to or when partnership capital is at
least three thousand pesos.
Kinds of Partners
a) Nature of contributions
b) Partners’liabilities to third person
c) Partners’interest or obligation to
the business
Nature of contributions, a partner may
be classified as
Capitalist partner- one who contributes
money,or property into the partnership
Industrial partner- One who contributes
only his industry or services to the
partnership
Capitalist- industrial partner- one who
contributes money or poverty as well as
his services to the partnership
Liabilities to third persons, a partner
may be classified
General partner- one whose liability to
partnership creditors extends to his
personal separate property
Limited partner- one whose liability to
third persons is limited to the capital
contribution
Interest in or obligations to the
business, partners may be classified as
Managing partner- one who manages
the affairs of the business
Secret partner- is not known by third
parties to be a partner in the business
but takes active part in the business.
Silent partner- one who does not take
active part in the business but is known
by third parties to be a partner in the
business.
Dormant partner- one who does not
take active part in the business and is
not known by third parties to be partner
Ostensible partner- one who takes
active partner and known to the public
as a partner in the business, whether or
not he has an actual interest in the firm .
Classification of Partnership
As to the liability of the partners, a
partnership may be classified either as
general or limited
General partnership- all partners are
general partners, which means the
liability of all partners to the partnership
creditor extend to their personal separate
property.
LImited partnership- composed of one
or more general partners and one or more
limited partners. A limited partnership
shall bear the word Limited.
As to object, a partnership is either
universal or particular.
Universal partnership of all present
property- partners contribute all the
property which actually belongs to the
them to a common fund, with the
intention of dividing the same among
themselves, as well as all the profits
which they may acquire therewith.
Universal partnership of profits- all
that the partners may acquire by their
industry or work during the existence of
the partnership
Particular partnership- its object
determine things their use of fruits, or
specific undertaking, or the exercise of a
profession or vocation.
As to duration, the partnership is
either a partnership at will or a
partnership with a fixed term
Partnership at will- is one in which no
time or period is specified for its existence
and is not formed for a particular
undertaking or venture. This may be
terminated anytime by mutual agreement
of the partners or by the will of any one
partner alone.
Partnership with a fixed term- the
term for which the partnership will exist
is fixed or agreed upon. Also applies to a
partnership that is formed for a
particular objective or undertaking.
Purpose, a partnership is either
commercial/ trading or professional
Commercial or trading partnership -
organized to undertake business
transactions such as merchandising or
manufacturing transaction.
Professional partnership- formed for the
practice of a profession, such as auditing
firm, law firm, and similar profession.
ADVANTAGES AND DISADVANTAGES OF
A PARTNERSHIP
Partnership is preferred over a sole
proprietorship because of the ff
reasons:
1) The skills and talents of two or
more individuals can be
combined.This could also lead to
dividing the management
functions among more than one
person.
2) Has the capacity to generate more
capital
Consequently, the formation of a
partnership rather than a sole
proprietorship has some disadvantages
as follows:
1) There is always the possibility of
conflicts between or among
partners arising from differences
in decision-making
2) Has limited life
3) Characteristics of mutual agency
of partnership may be considered
a disadvantage. Partnership was
liable for the unscrupulous and
wrongful acts of any partner.
4) The characteristics o unlimited
liability could bring the business
risk of the partner extending to his
personal assets.
Accounting for a partnership
Formation
-One primary difference between a
partnership and a single proprietorship is
that there are separate drawing and
capital accounts for each partner in
partnership.
-when non-cash assets are contributed
by a partner , these assets are recorded
at values agreed upon by all partners,
which generally are the fair values of the
assets at the time of contribution.
The admission of an industrial partner is
recorded through a memorandum entry,
stating that fact and his or her share
profit.
In some cases, a partnership is formed
when a proprietor invites some individual
or another proprietor in the same line of
business to join him or her to avoid
competing with each other or to expand
their operations.
Although the old set of books of one of the
old proprietors may be used for the
partnership transaction, it is preferable to
use a new set of books since a new basis
of accountability arises upon the formation
of the partnership.
Assume that the partnership would use
a new set of books
In the individual books of both entity
● Respective assets and liabilities
shall be adjusted, debiting or
crediting directly the capital
accounts
● All accounts shall be brought to
zero balances
In the new set of books of the partnership
● The assets and liabilities received
from the entity shall be recorded.
The PPE accounts are taken up
the agreed F.V., without
transferring to the books of the
partnership the related
accumulated depreciation. The
creation of the partnership gives
rise to a new basis of
accountability, such that the fair
values at the date of contribution
are the cost basis for PPE.
● Cash contributed coming from the
single proprietorship shall be
 increased or decreased to bring
their respective capital balances.
The adjustments to accounts receivable,
building, and furniture and equipment
are made through their related valuation
accounts. Thus, to decrease the
amortized cost of Accounts receivable, the
allowance for uncollectible accounts is
credited.
-To decrease the Carrying value of the
Building, the accumulated depreciation
account is credited; and to increase the
carrying value for furniture and
equipment, the related accumulated
depreciation account is debited.
Note that the Building and Furniture and
Equipment accounts are carried forward to
the books of the partnership at their new
cost basis. The accumulated depreciation
balances are netted against the asset
accounts.
The allowance for uncollectible accounts,
on the other hand, is not netted against
the accounts receivable, since the
allowance reflects the accounts that are
estimated only to be uncollectible.
PART 2: PARTNERSHIP OPERATION
-Partners in a partnership agree to divide
profit and losses among themselves. A
stipulation in the partnership contract,
which excludes one r more partners from
any share in the profit or losses is
considered void.
-In the process of closing the books of the
partnership, income, and expense
accounts are transferred to the Income
Summary account. The resulting credit
balance in the I.S. account represents
profit, while the resulting debit balance
represents a loss.
-Partnerships, except general professional
partnerships, are subject to a corporate
income tax rate .The income tax of a
partnership is reported as an expense but
is shown separately in the I.S. The profit
then after deducting the income tax,is the
amount dividend among the partners
Division of Profits and Losses
Partners may consider various factors in
determining how equitably and fairly the
partnership P/L shall be divided among
themselves. The factors include :
1) The time spent by each partner in
overseeing or managing activities
of the partnership
2) The capital contribution of each of
the partners
3) The managerial or technological
skills of one or some of the
partners
4) Level of a partner’s influence on
the environment partnership is
operating
The following are some examples of how
partners may divide profits and losses:
1) In an arbitrary ratio
2) In the ratio of the partner's capital
balances
● Beginning capital ratio
● Ending capital ratio
● Average capital ratio
3) Allowance for interest on capital
balances and the remainder of
profit in an agreed ratio
4) Allowance for salary and/or bonus
and remainder of profit agreed
ration
5) Allowance for interest on capital
balances, allowance for and/or
bonus, and the remainder of profit
in an agreed ratio.
The profits and losses shall be divided in
conformity with the partners agreement.
Any partnership loss shall be divided in
the same manner as profit when the
agreement provides only for the manner
of dividing profit.
The Pro-forma journal entry to record
the distribution of profit to the
partners is as follows
Income Summary xx
Y, drawing xx
X, drawing xx
In situations where the Profit is not
sufficient to provide the interest and
salary allowances, or in worse situations
where the partnership incurs a loss of
interest and salary allowances are
provided for in full. Any resulting loss is
divided by the ratio agreed upon by the
partners
PART 3: CHANGES IN PARTNERSHIP
OWNERSHIP
-Additional capital may be required by
firms in an attempt to compete within the
business environment where the
company operates. This may induce
existing partners to invite additional
persons to infuse capital into the entity.
In some instances, legal provisions may
cause a partner to cease association with
the partnership
The change in partnership ownership
may be caused by any of the following
a) Admission of a new partner
b) Withdrawal of an old partner
c) Voluntary dissolution of the
partnership by the [artners
d) Involuntary dissolution through
bankruptcy proceedings
e) Termination of the definite term or
particular undertaken specified in
the agreement
f) Civil interdiction of any partner
g) Any event which makes it
unlawful for the business of the
partnership to be carried on or for
members to carry it on in the
partnership
-any change in partnership ownership
caused by any of the foregoing result in
partnership dissolution, because the
original relationship between the partners
is terminated, without regard as to
whether or not the partnership wil
continue operations
Partnership dissolution- change in the
original relationship of the partners
caused by any partner ceasing to be
associated in the partnership.
-does not refer to the termination of
business activities, thus the original
relationship between or among partners
withdraws from a partnership, the
original relationship between or among
the partners ends, and a new relationship
between the remaining partners is
created.
Partnership Liquidation- is the process
of winding up the affairs of the
partnership and affects the interest of the
parties. It is a complete termination of
the partnership operations, accompanied
by the realization of assets, payment of
liabilities, and distributions of remaining
assets to the partners.
Admission of a New Partner
The admission of new partner may be
necessitated by:
a) Additional capital requirement
necessary for expansion of
business operation
b) Required technical knowledge that
can be provided by an incoming
partner
 c) Business advantage that can be
contributed by an incoming
partner on account of the degree
of his/her personal influence in
the business environment in
which the partnership operates.
The admission of a new partner required
the consent of all partners because a
partnership is governed by mutual trust.
Before recording the admission of an
income partner, the books of the
partnership must be adjusted and closed.
Asset and liabilities, ideally, should be
brought to their F.V. or agreed-on values to
determine a fair valuation of the equities of
the old partners.
A new partner may be admitted into the
partnership either by purchase of interest
from one or more partners or by the
investment of money or other resources in
the partnership.
Purchase of Interest- is a transaction
whereby an incoming partner buys all or
part of the equity of an existing partner or
partners in a partnership. Thus, the
transaction involves a transfer of capital
from an existing partner to an incoming
partner.
-purchase price is an amount that is
agreed upon by the incoming partner and
the selling partner. The amount of equity
purchased by the incoming partner is not
necessarily equal to the purchase price.
Any difference between the purchase
price and the purchase equity is personal
gain or loss of the selling partner.
-the records of the partnership do not
recognize the amount of payment made
by the incoming partner of the selling
partner or partners, without regard as to
whether the transaction results in a
personal gain or loss to selling partner or
partners.
-In some cases, the amount invested by
an incoming partner may not be the
amount that is credited to his/her capital
account. This indicates that the partners
both old and new , acknowledge that
either the old partners or the new partner
contribute unidentifiable advantage into
new firm. This may be due to the
technical ability or managerial ability of
the old or new partners, favorable
business location of the partnership,
product superiority and other factors.
Bonus- transfer of equity . If the amount
credited to the new partner’s capital
account does not equal the new partner’s
actual contribution, there is a transfer of
equity either from the old partners to the
new partner or from the new partner to
the old parties
Capital credit to New Partner ≠ New
Partner’s Actual Investment =>
Difference is bonus
Capital Credit to New Partner > New
Partner’s Actual Investment => the
difference is bonus to new partner
Capital Credit to New Partner < New
Partner’s Actua Investment =>
Difference is bonus to old partners
Similar to accounting for the purchase of
interest from an old partner, an
investment of asset by a new partner that
results in total partner’s equity different
from actual total contribution of the old
partners and new partner may indicate
that some assets or liabilities of the
partnership are overvalued or
undervalued. In such a case, an entry
should first be taken up to revalue the
partnership assets and liabilities to fair
values.
RETIREMENT OR DEATH OF A
PARTNER- also dissolves a partnership
because of the change in ownership. The
accounting procedures for the admission
of a partner are also applied upon death
or withdrawal of a partner. Books should
be adjusted to determine partnership P/L
during the reporting period up to the date
of death or retirement of the partner.
-The equity of the retiring or deceased
partner should be settled. If settlement
cannot e practically completed
immediately, the capital account of the
retiring or deceased partner should be
converted into a liability .
Depending on what has been agreed
upon, the amount of settlement may either
be (a) carrying amount (b) more than the
carrying amount ( c) at less than the
carrying amount of the equity of the
retiring partner or decreased partner.
A. Settlement is equal to the
capital balance of the retiring
partner - The settlement is equal
to the C.A. of partner’s interest, as
he is to be paid a certain amount,
which is equal to his capital
balance.
B. Settlement is for an amount
more than the capital balance of
the retiring partner- The amount
to be paid to the partner is more
than the carrying amount of his
capital. The excess of cash
settlement over the carrying
amount of partner’s equity may
indicate that some asset were
undervalued, or some liabilities
were overvalued.
C. Settlement is for an amount less
than the capital balance of the
retiring partner - A settlement
price paid to the retiring partner
which is less than his/her interest
in the partnership may imply that
the partnership assets are
overvalued. In such case an
adjustment shall be made to
eliminate the overvaluation of that
asset.
D. Withdrawal by selling the
interest to the remaining
partners- a partner may also
retire from the partnership by
selling his/her interest to the
remaining partners or to a new
partner. The accounting
procedures for this mode of
retirement are similar to the
procedures to account for the
admission of a new partner by
purchase of interest.
-after recording the retirement by
sale of interest, the adjusted
capital balance of the retired
partner should have been
transferred to the buyer’s capital
account.
PART 4: PARTNERSHIP LIQUIDATION
Dissolution is the charge in the original
relationship of the partners in a
partnership. Upon dissolution, the
partnership, under a new agreement,
may carry on its activities, or it may wind
up to its operations and terminate both
its legal and business entity.
- If the partnership winds up its
affair and terminated its
operations, the dissolution is
followed by liquidation
A partnership may be liquidated for a
number of possible reason
 a) Partnership may be suffering from
financial distress and continuing
the operations of the entity may
only worsen the financial
condition of the firm.
b) Partnership organized for a
particular undertaking or purpose
may liquidate once the specific
undertaking or purpose has been
completed or accomplished.
c) If the partnership was organized
with a fixed term, the termination
of such period would also cause
its liquidation.
d) A court order, for some reason,
may likewise result to a
partnership liquidation
e) In some instances the partner may
simply agree to voluntarily
terminate the operations of the
partnership as operation of the
entity may not be mutually
beneficial anymore to the partners
Lump-sum liquidation- if partnership
liquidation is completed within a
reasonably short period time, such that
all the non-cash assets are immediately
realized and cash is immediately
distributed to creditors and partners.
Installment liquidation- the liquidation
process extends over a considerable
period of time because of the difficulty of
converting all the non-cash assets into
cash . In this case, cash is distributed to
creditors and partners as it becomes
available.
Liquidation Process
● Conversion of non-cash assets into
cash ( process of realization)
● Distribution of cash ( the
distribution of partnership assets
shall rank in the following order of
priority)
-Those owing to creditors other
than partners
-those owing to partners other
than for capital and profits
-those owing to partners in respect
of capital
-those owing to partners in respect
of profit.
The process of liquidating the partnership
is summarized in a statement of
partnership liquidation. This statement
could serve as the basis for journal entries
during the liquidation process.
Any gain or loss, may first be credited or
charged to Gains or Loss on the
Realization account, and then
subsequently closed to the capital
accounts of the partners, the amount being
divided according to the partner’s P/L
ratio
If after the distribution of Gain or loss on
realization, and the capital balances of all
the partners still show positive amounts.
The payment to partners in respect of loan
and capital balances immediately follows
the payment to creditors.
When a partner is insolvent, care must be
taken in exercising the right of offset, as
the interest of the partner’s personal
creditors must be considered. Partner’s
loan to the partnership form part of his
personal assets. The personal creditor
would have a prior claim on this loan
balance.
PART 5: FOMATION AND SHARE
CAPITAL TRANSACTION
NATURE OF A CORPORATION- REvised
Corporation Code of the Philipines
defines corporation as an artificial being
created by operation of law, having the
right of succession and the powers,
attributes and properties expressly
authorized by law or incidental to its
existence
Corporation is characterized by the
following:
1) Separate legal existence- the
corporation acts in its own name,
rather than in the name of its
shareholders. Some of the
consequences that may arise from
the separate legal personality of a
corporation are as follows:
● A corporation is liable for all
contracts lawfully entered into by
its officers
● Corporation can sue and be sued
in its own name
● The assets of a corporation are
separate from those of its officers
or member
● Corporate are not the liabilities of
any of its shareholders or officers
2) Created by operation by law-
corporation by a general law that
authorizes and regulates it
creation. A corporation cannot be
created by a mere agreement
between the parties wishing to
organize. The organization of
private corporation in the
Philippines is governed by R.A.
11232 or the Revised Corporation
code of the Philippines
3) Right of succession- refers to the
corporation’s capacity of
continuous existence, not
considering the death, withdrawal,
or intercapacity of the individual
member or shareholders and
regardless of the transfer of the
shareholder’s interest or shares of
stock.
- Succession, however, does not
mean immortality of the
corporation. The corporate life or
term is for a period not exceeding
50 years at the time of the date of
incorporation.
4) Powers, attributes and
properties expressly authorized
by a law or incident to its
existence
a) Express power, which
refers to those granted by
law or enumerated in its
articles in incorporation.
b) Incidental powers- those
necessary for corporate
existence and which can be
exercised.
c) Implied powers- those
derived from the express
powers and incidental
powers.
5) Limited liability of shareholder-
The owners of the corporation are
liable to the corporate creditors up
to the extent of what they have
contributed to the corporation .
6) Corporate management-
vested in the BOD. The members
of the BOD are elected by the
shareholders. The members of the
BOD elect the officers among
themselves
7) Government regulations
These regulations have the
purpose of protecting the interest
of the owners, since most owner
do not actively participate in the
day-to-day management of the
company
Classes of Corporation
Domestic Corporation- Organized and
incorporated under the Philippine laws;
whereas, foreign corporation is organized
and incorporated under foreign laws.
Public corporation- created for the
purpose of governing a particular
segment of the state such as
municipalities, and cities.
Private Corporation- organized by
private individuals for private purpose,
aim or benefits.
Quasi-Public Corporation- private
corporation that has accepted a grant
from the state, or a franchise to perform
public duties.The are also known as
public utilities or public service
corporations, such as electric, water etc.
Stock Corporation- is one whose
ownership is divided into units called
shares of capital stock. Corporation is
authorized to distribute dividends to the
holder of such shares on the basis of the
number of shares held.
Non-stock corporation- one that is not
organized for profit. It may be religious,
social, scientific etc.
Ecclesiastical Corporation- Organized
for religous purposes primarily composed
of spiritual persons.
Lay Corporation- one organized for
non-religous purposes.
Open Corporation- may be offered to
public
Listed corporation- one whose shares
are traded in stock exchange.
Over-the-counter corporation- one
whose shares are traded in a market in
which securities dealers buy and sell
directly from and to the public.
Closely-held corporation- one whose
ownership is limited to few persons and
its shares are not available for purchase
by the public.
Close corporation- does not list its
shares in any stock exchange nor does it
make any public offering of its shares of
stocks.
Eleemosynary corporation-
Corporation that is established for charity
Civil corporation- established for
business or profit.
De jure corporation- one that exists in
fact and in law.
De facto corporation- one that exists in
fact and not in law.
COMPONENTS OF A CORPORATION
Corporators- those who compose the
corporation whether shareholders or
members
Incorporators-those mentioned in the
articles of incorporation as originally
forming and composing the corporation
and who executed and signed the articles
of incorporation
Shareholder- corporators in a stock
corporation and are the owners of the
shares of stock in a stock corporation.
Member-are the corporation in a
non-stock corporation
Promoters-person who bring about or
cause to bring about the formation and
organization of a corporation by bridging
together the incorporators.
Subscribers- are the person who have
agreed to take and pay for original,
unissued shares of a corporation formed
or to be formed.
Underwrites- person, usually investment
bankers, who undertake the public sale
or subscription of share.
THE PROCESS OF INCORPORATION
1) Promotion
2) Incorporation
3) Formal organization and
commencement of business
operation
By laws of corporation - is a supplement
to the articles of incorporation and
contains provisions for the internal
administration of the corporation.
CORPORATE CAPITAL STRUCTURE
Share Capital- amount fixed, usually by
the corporate charter, to be subscribed
and paid in or secured to be paid in or
secured to be paid in by the shareholder
of a corporation either in money or in
property, labor or services.
Par value- value of each share of stock
specified in the articles of incorporation
and in the share certificate.
Share certificate- written
acknowledgment by a corporation of the
shareholder’s interest or ownership in the
corporation
Preference Share- preference share is
generally issued with par value and an
annual dividend rate expressed in
percentage or peso amount per share.
Ordinary Share- normally entitling
holder to all the basic rights of a
shareholder.
ACCOUNTING FOR SHARE CAPITAL
TRANSACTIONS
Authorized Share Capital
The use of the memorandum entry
method and the entry method and the
journal entry method is illustrated below
and on the following page
Authorization to issue share capital
Memorandum entry method
Authorized to issue xx shares of capital
share with total par value xxx
Journal entry method
Unissued share capital xx
Authorized Share Capital xx
The term share capital generic term used
for preference and ordinary share. If the
class of share capital specified, specific
terms as preference share capital and
ordinary shares capital.
b) Issuance of share capital for cash
Memorandum entry method
Cash xx
Share Capital xx
Journal Entry Method
Cash xx
Unissued Share Capital xx
c) Subscription of share capital
(assume that issue price is equal to par
or stated value)
Memorandum entry method
Subscription Receivable xx
Subscribed Share Capital xx
Journal Entry Method
Subscription Receivable xx
Subscribed Share Capital xx
d) The full amount of the subscription
price is collected and shares are
correspondingly issued
Memorandum entry method
Cash xx
Subscription Receivable xx
Subscribed Share Capital xx
Share Capital xx
Journal Entry Method
Cash xx
Subscription Receivable xx
Subscribed Share Capital xx
Unissued Share Capital xx
The only difference between the
memorandum entry method and the
journal entry method is the account title is
credited upon the issuance of share
capital
Under the memorandum entry method, the
balance of the Share Capital account
represents the total par value of the share
capital issued to the shareholder
Under the journal entry method, the
balance of unissued Share Capital account
is deducted from the balance of the
Authorized Share Capital to arrive at the
amount of share capital issued to the
shareholder.
Issuance of ordinary share capital for
cash at more than par value
When the amount of cash received from
the issuance of ordinary share capital is
greater than the total par value of the
share, the excess is recorded in the
accounts as an additional paid-in capital
appropriately titled as Share premium
Cash xx
Ordinary Share Capital xx
Share Premium- Ordinary xx
Issuance of ordinary share capital in
exchange for non-cash assets or
property
When ordinary share capital is issued in
exchange for assets other than cash, the
asset is recorded at its fair market value
or the fair market value of the shares,
whichever is more clearly determinable
Asset xx
Ordinary sare capital xx
Share premium-Ordinary xx
Issunace of ordinary share capital in
exchange for services rendered
When ordinary share capital is issued in
exchange for legal and clerical services
rendered during the incorporation stage,
an expense account is debited for the fair
market value of the services rendered or
the fair market value of the shares
issued.
-expenditures incurred in organizing an
entity are not qualified to be reported as
asset, and such, these expenditures are
recorded as expenses.
Professional and clerical fees xx
Ordinary Share Capital xx
Share premium-ordinary xx
Issuance of preference share capital
and ordinary share capital for a lump
sum amount
Wen two classes of share capital are
issued for a lump-sum amount the total
amount received should be allocated to
the two classes of share capital based on
the total fair market value of the shares
issued.
Cash xx
Ordinary share Capital xx
Share Premium-Ordinary xx
Preference Share capital xx
Share premium xx
Sales of share capital on a subscription
basis
Subscription receivable-Ordinary xx
Subscribed Ordinary Share C xx
Share Premium-Ordinary xx
Assuming that a cash collection is made
from subscriptions receivable, a proforma
journal entry to record such a collection
Cash xx
Subscripton Receivable xx
When the subscription price is already
collected in full, stock certificates are
issued and the final collection is
accompanied by the ff journal entry to
record the issuance of stock certificate
Subscribed Ordinary share Capital xx
Ordinary Share Capital xx
Accounting for No-Par Shares
Cash xx
Ordinary share capital xx
Share Premium- Exces / stated
value xx
No par, no stated value share
Cash xx
Ordinary Share Capital xx