Share issues

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Financial Accounting, share issues, share applications, excess on applications, forfeiture of shares, reissue of shares

Text of Share issues

  • 1. Journal Entries for Issuing Shares & Forfeiture of Shares
  • 2. Share Issues follow a logical Process 1. There is an application for shares 2. There is an allotment of shares 3. The allotment money becomes due 4. The allotment money arrives 5. The first call becomes due 6. The first call money arrives .etc for any other calls
  • 3. The Share Issue needs to be recognised Dr Application Dr Allotment Dr Uncalled Shares Cr Share Capital
  • 4. 1. Application for Shares receipt the money received Dr Bank Cr. Application Acct. 2. Allot the Shares Dr Bank Cr Allotment Acct
  • 5. 3. First Call becomes due Dr First Call Cr. Uncalled Share Capital 4. First Call money arrives Dr. Bank Cr. First Call
  • 6. For any subsequent calls - journal the call as it become due Dr. XXX Call Cr Uncalled Share Capital - journal the money when it arrives for the call Dr Bank Cr XXX Call
  • 7. Remember: The very first Journal Entry will record - the Application - the Allotment - All the calls - To the Share Capital
  • 8. What to do with an over-subscription of applications for shares
  • 9. Excess money on application is adjusted towards the sums due on allotment Dr Application Acct Cr Share Allotment Unless the excess applications are rejected Dr Application Acct Cr Bank
  • 10. What to do with Forfeiture of Shares
  • 11. Forfeiture of Shares the Steps 1. Make adjustment to Call 2. Make an adjustment to the Share Capital 3. Shut Call in arrears
  • 12. 1. Adjustment to Call Dr. Call in Arrears Cr Call 2. Adjust Share Capital Dr Share Capital Cr Forfeiture Reserve Capital 3. Shut Call in arrears Dr. Forfeiture Reserve Capital Cr Calls in Arrears
  • 13. You Still have to reissue the shares 1. Make an entry for reissue of share capital 2. Move the money from the forfeiture reserve account to reissue 3. Reissue the shares 4. Refund any funds
  • 14. 1. Reissue the Shares Dr. Reissue Cr Share Capital 2. Close the Forfeiture Reserve Acct Dr Forfeiture Reserve Acct Cr Reissue 3. Reissue shares at new price Dr Bank Cr Reissue 4. Refund any money left over Dr Reissue Cr Bank
  • 15. The End


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