SHARE CAPITAL Flashcards
(18 cards)
Owners equity is made up of
Share capital
Reserves
Retained earnings
Other comprehensive income e.g. revaluation surplus
Ordinary shares
Ownership in company
Voting rights
Rank last
Preference shares
Preferential treatment
Dividend priotity
Retained earnings
Portion of profits company keeps within he business
Reserves
Part of retained earnings, set aside by a company for specific purposes, created through allocations of retained earnings
Reserves journal
Transferring from RE to general reserve
Dr retained earnings
Cr. General reserves
Share issue process
Preparation
Register w regulation authority
Due diligence by underwriters
Allocation
Issue shares
Issue of share capital journal
Recognise receipt of application
Dr bank trust
Cr applicaiton
Issue of share capital
Recognise issue of shares and to close application account
Dr application
Cr share capital
Issue of share capital journals
Transfer cash front rust acccoutn to company bank
Dr cash at bank
Cr bank trust
Issue of share capital journals
Fully paid shares, issue for cash
Dr Cash at bank
Cr share capital
Partially paid shares JE
Issue for instalments
Dr equitable receivable
Cr share capital
Partially paid shares JE
Receipt of cash for call
Dr cash
Cr equity receivable
Dividends JE
Declaring
Dr interim/final dividends
Cr interim/final dividends payable
Dividends je
Dividends declare closed to equity (RE)
Dr retained earinigns
Cr interim / final dividends declares
Dr interim/final dividends payable
Cr cash
Approach’s for oversubscription of shares
- Reject the excess
- Issue on a pro-rata basis
- Increase number of shares / increase price
Forfeited share JE
Recognise payment of costs relating to sale of shares
Dr forfeited shares acct
Cr cash
Forfeited shares JE
Recognise return of remaining money to original shareholder
Dr. Forefited shares acct
Cr Cash
