ACCOUNTING FOR CORPORATION SAMPLE ENTRIES

memorandum method journal entry method

Authorized Capitalization
The authorized capitalization is Pxx divided into #xx Unissued share capital xx
shares with par value per share of Pxx Authorized share capital xx
To record authorized capitalization
Subscription
Cash xx Cash xx
Subscription Receivable* xx Subscription Receivable* xx
Subscribed share capital xx Subscribed share capital xx
To record subscription To record subscription
Collection of subscription receivable and Issuance of shares
Cash xx* Cash xx*
Subscription Receivable xx Subscription Receivable xx
To record collection of subscription To record collection of subscription

Subscribed share capital xx Subscribed share capital xx

Share capital xx Unissued Share capital xx
To record issuance of shares To record issuance of shares
Subscription price of #xx shares (# of shares x par value) xx
Portion paid (subscription price x %paid) (xx)
Balance collected* Pxx*
Cash subscription
Cash xx Cash xx
Share capital xx Unissued share capital xx
To record subscription To record subscription
Share capital
Share Capital xx Authorized share capital xx
Subscribed share capital xx Unissued share capital (xx)
Subscription receivable (xx) Issued share capital xx
Total Share Capital Pxx Subscribed share capital xx
Subscription receivable (xx)
Total Share Capital Pxx
Share premium
Cash xx NOTE:
Share capital xx This only applies to problem with
Share premium xx “cash subscription”
To record cash subscription

Subscription receivable xx NOTE:

Subscribed Share capital xx This only applies to problem with
Share premium xx “receives subscription”
To record received subscription
Total Contributed Capital
Share Capital xx
Subscribed share capital xx
Subscription receivable (xx)
Share Premium xx
Total Share Capital Pxx

Issuance of Share Capital on Cash Basis (Ordinary/ Preferred Share)

Cash xx NOTE!
 Share Capital xx o amount with given par value is
Share Premium* xx recorded at the par value
To record issuance of share capital o amount without given par value is
recorded at the stated value
o amount without given par value
and stated value is recorded based
on given
Issuance of Share Capital on Non-Cash Basis (Ordinary/ Preferred Share)
Asset/Service Expense xx NOTE!
Share Capital xx o amount with given par value is
Share Premium* xx recorded at the par value
o amount without given par value is
To record issuance of share capital
recorded at the stated value
o amount without given par value
and stated value is recorded
based on given
Legal Capital
PAR NO-PAR
% Preference share capital, xx par value xx xx
Ordinary/Preferred share capital xx xx
Share Premium – Ordinary/Preferred xx xx
Subscribed share capital – Ordinary/Preferred xx xx
LEGAL CAPITAL XX XX

Note! In case of no-par value shares, legal capital includes share premium of ordinary shares
Preference shares is only issued as par value shares. Thus, no share premium of preferred shares is included
Share issuance costs
Cash xx
Share Capital xx
Share Premium* xx
To record issuance of share capital

Share Premium xx NOTE! The amount in share premium and cash

Cash xx based on given
To record share issuance cost
Treasury Shares
“reacquires” “reissues”
Treasury Shares xx Cash xx
Cash xx Treasury Shares xx

Retained Earnings – unrestricted xx Retained Earnings – appropriated xx

Retained Earnings – appropriated xx Retained Earnings – unrestricted xx
“reissues at more than the cost” “reissues at below cost”
Cash xx Cash xx
Share premium- treasury shares xx (1) Share premium- treasury shares xx
Treasury Shares xx (2) Retained Earnings xx
Treasury Shares xx
Retained Earnings – appropriated xx
Retained Earnings – unrestricted xx Retained Earnings – appropriated xx
Retained Earnings – unrestricted xx

Retirement of Shares
“reacquires and retires them” “reacquires and immediately retires them”
RETIREMENT AT BELOW ORIGINAL ISSUANCE PRICE RETIREMENT AT ABOVE ORIGINAL ISSUANCE PRICE
reacquisition reacquisition
Treasury Shares xx Treasury Shares xx
Cash xx Cash xx

retirement retirement
Share Capital (par/stated value) xx Share Capital (par/stated value) xx
Share premium – original issuance xx Share premium – original issuance xx
Treasury shares (cost)/ Cash xx (1) Share premium – TS xx
Share premium – retirement xx (2) Retained earnings xx
Treasury shares (cost)/ Cash xx
*Share premium from original issuance is computed as:
Total share premium before retirement xx
Divided by: Total issued shares before retirement xx
(share capital amount / par value)
Share premium per share from original issuance PXX