Share Issue Flashcards
what is Shareholders equity?
Residual interest in the assets of the entity
after deducting all its liabilities
what are the key components of equity?
Contributed capital
Reserves (current or retained earnings)
is cash is recieved for share applications, but shares have not yet been issued, what account is the cash held in?
Dr Cash account trust is used to record cash prior to the shares being issued- the cash is held in a
trust account on behalf of the applicants
Represents a liability of the company prior to the shares being issued
cash recieved for application is recorded in cash trust and which other account? once issued what happens?
Cr application account
Dr applications, Cr share capital
Cr Cash trust Dr Cash
what is different about the process if shares are only issured to specific investors?
no application process
Dr cash
Cr share cap
what does balance on call refer to?
request remaining payment for shares at a later date
how is a call recorded?
Dr call
Cr Share Cap
The call account is a temporary account used when further instalments are paid after shares are issued
after:
Dr cash
Cr call
what happens when call amount is not recieved?
what are the options for the company?
Where call money is not received directors
may forfeit (cancel) shares company may:
Retain the balance of paid monies.
Refund the amount paid to the forfeiting
shareholder.
what are the enteries for retaining monies paid?
Dr Share Cap
Cr Call
Cr forfiet share reserve
what an the directors do if there is an oversubscription?
Directors of the company may:
Reduce the number of shares to be issued to each applicant (on a pro-rata basis)
Issue shares only to certain applicants (eg on a first-in-first-served basis)
what do they do with application money in the case of oversubsciption?
Refunding excess application monies to unsuccessful applicants;
or
Retaining the excess application money as an advance on future calls
what are the entries for paying dividends?
Dr retained earnings
Cr dividends payable
Dr dividends payable
Cr cash
