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Post Info TOPIC: Share capital double entry


Guru

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Share capital double entry


Please confirm if the below is correct.

If you have paid for the share capital then you would:

DR Bank

CR Share Capital

If you have not yet paid for the share capital then you would:

DR Directors Loan Account

CR Share Capital



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Thanks, Nadia.



Master Book-keeper

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Posts: 8646
Date:

Yes to the first assuming it was paid via the Bank.

But would the second double entry not achieve the same thing and render the share effectively paid. Especially if it's for a small noiminal value and there are then other movements via the DLA which effectively put it into a credit position, so the amount gets mopped up with the rest.

Does it remain unpaid and likely to be for a while? Or called for? What is the value? I'm assuming this is a small co.





__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Senior Member

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Nadia,

If your intention is to record the amounts as "unpaid", then both of the balance sheet formats specified in the companies act allow for two ways of disclosing unpaid called up share capital:

  1. In a separate section (A in companies act classification), before Fixed Assets, called "Called up share capital not paid"; or,
  2. Under Other Debtors within Debtors within Current Assets (C.II.3 in companies act classification).

Either is acceptable.

Regards,

[Edit: typo in first line]



-- Edited by Onion4Sage on Tuesday 13th of September 2016 08:56:21 PM

__________________

Ian

Ian Brown FCA
Onion Reporting Software Ltd

www.onionrs.co.uk

Sage accounts in Excel. No set-up necessary. Free trial.



Newbie

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Posts: 3
Date:

Hi, I have registered a new limited company with 100 shares at £1.00 per share. Initially, the shares were not paid. After several weeks, they have been paid by the shareholders to the company's bank account.

I am not an accountant, but I do know a little bit about accounting from work. I thought I would try and do some of the initial accounting myself. This is what I have done:

 

1. Shares are Issued

DR Called up share capital not paid - £100.00

CR Called up share capital - £100.00

 

2. Shares are Paid

DR Bank - £100.00

CR Called up share capital not paid - £100.00

 

Is the above correct? 

 

Do I need to move the shares to a different account (because they have been paid, so they are no longer in "called up" status)?

For example:

DR Called up share capital - £100.00

CR Share capital - £100.00

 

Thank you!



__________________
Juan Guirao
AC


Veteran Member

Status: Offline
Posts: 30
Date:

freenrg wrote:

Hi, I have registered a new limited company with 100 shares at £1.00 per share. Initially, the shares were not paid. After several weeks, they have been paid by the shareholders to the company's bank account.

I am not an accountant, but I do know a little bit about accounting from work. I thought I would try and do some of the initial accounting myself. This is what I have done:

 

1. Shares are Issued

DR Called up share capital not paid - £100.00

CR Called up share capital - £100.00

 

2. Shares are Paid

DR Bank - £100.00

CR Called up share capital not paid - £100.00

 

Is the above correct? 

 

Do I need to move the shares to a different account (because they have been paid, so they are no longer in "called up" status)?

For example:

DR Called up share capital - £100.00

CR Share capital - £100.00

 

Thank you!


 Why talk about yourself both in 1st and 3rd person.

Question is why did you call up the share capital?

You are over complicating the entries.

Do say that you have an Accountant? Would be very foolish not to.



__________________

AC



Newbie

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Posts: 3
Date:

Hi AC,

Sorry that you did not like that I spoke about "the shareholders". I thought it would be clearer. Let me rephrase it. I hope you like it better now:

 

I have registered a new limited company with 100 shares at £1.00 per share. Initially, the shares were not paid. After several weeks, they have been paid by the shareholder (me) to the company's bank account. I am not an accountant, but I do know a little bit about accounting from work. [More added on this below, as it seems to be important]

I thought I would try and do some of the initial accounting myself. This is what I have done:

 

1. Shares are Issued

DR Called up share capital not paid - £100.00

CR Called up share capital - £100.00

 

2. Shares are Paid

DR Bank - £100.00

CR Called up share capital not paid - £100.00

 

Is the above correct? 

 

Do I need to move the shares to a different account (because they have been paid, so they are no longer in "called up" status)?

For example:

DR Called up share capital - £100.00

CR Share capital - £100.00

------------------------------------- 

You are saying it would be foolish not to have an accountant. I understand. I will at some point as the business picks up but, in the meantime, why not try and improve my understanding? I am comfortable with accounting. I studied accounting at the university and later on my own with US accounting books and in my previous job in Spain I often helped the company's accounting solve accounting problems. I am just not very familiar with UK accounting and I would like to confirm whether I am doing it right.

Regarding why the share capital is called up, if it is not paid I think it is called up. See the reply above by Onion4Sage (Ian).

He wrote:

"If your intention is to record the amounts as "unpaid", then both of the balance sheet formats specified in the companies act allow for two ways of disclosing unpaid called up share capital:

  1. In a separate section (A in companies act classification), before Fixed Assets, called "Called up share capital not paid"; or,
  2. Under Other Debtors within Debtors within Current Assets (C.II.3 in companies act classification).

Either is acceptable."

Here are the mentioned balance sheets formats: https://www.legislation.gov.uk/uksi/2008/409/schedule/1/made?view=plain

 

So, yes. It was my intention to record the amounts as unpaid and I am just following the first one of the available options.

However, I am not sure what I am doing once the shares have been paid is correct.

Any opinion on that?

 

Thank you!



__________________
Juan Guirao


Senior Member

Status: Offline
Posts: 231
Date:

Hi Juan,

 

Yes, what you are doing is correct. Paid up shares remain "called up". "Called up" has a complex definition. This link tells you more than you ever wanted to know about share capital! https://library.croneri.co.uk/cch_uk/dgaap/a5-2-7

Regards,

 

 



__________________

Ian

Ian Brown FCA
Onion Reporting Software Ltd

www.onionrs.co.uk

Sage accounts in Excel. No set-up necessary. Free trial.



Newbie

Status: Offline
Posts: 3
Date:

Thank you, Ian!

__________________
Juan Guirao
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