3.

4 ACCOUNTING ON
SHAREHOLDERS’ EQUITY
TRANSACTIONS
 The difference of the two method are shown below:

For example:
There are two methods used in recording the
XYZ Company is authorized to issue 10,000 share capital at a par value of shareholders’ transactions, namely, the journal
P10. entry method and memorandum entry method.
Transactions Memorandum Entry Method Journal Entry Method In business world, memorandum entry method
is normally used.

Authorization of XYZ Company is authorized to Unissued Share Capital 100,000

Share Capital to issue 10,000 share capital at a par Authorized Share Capital 100,000
Issue value of P10.
When a corporation is granted the authority to
issue shares, the law prescribed that 25% of the
Subscriptions of Subscription Receivable 25,000 Subscription Receivable 25,000
Shares Subscribed Share Capital 25,000 Subscribed Share Capital 25,000 authorized shares shall be subscribed and 25% of
which shall be paid.

Collection of Cash 6,250 Cash 6,250

Subscription Subscription Receivable 6,250 Subscription Receivable 6,250
Receivable
Share capital shall be issued upon full payment of
the subscribed shares.
Upon full Cash 18,750 Cash 18,750
payment of Subscription Receivable 18,750 Subscription Receivable 18,750
Subscription
Receivable Subscribed Share Capital Subscribed Share Capital 25,000
25,000 Share Capital 25,000 Unissued Share Capital 25,000
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