Archive about 'Limited Companies'

Limited Companies:Over-subscription Of Shares Issued

This article deals with a limited company which has a scenario of over-subscription of shares issued. The accounting entries are shown and an illustration being given for clearer understanding.

When a limited company issue shares where the more shares are applied for than those available for issue, it results in the [...]

Revision Notes On Limited Companies: Issue Shares On Installment & Method Of Raising Share Capital

 

ISSUE SHARE ON INSTALLMENT

Usually issues share in full amount or installment. When shares are issued as installment, an APPLICATION and ALLOTMENT Account is created
· Where shares are issued and money is received from applicants at PAR VALUE
(a)  Debit: Bank Account
     Credit: Application & Allotment A/c
 (b) Debit: Application & Allotment a/c
     Credit: Shares Capital A/c
 
· [...]

Profit And Loss Appropriation Account

The Profit And Loss Appropriation Account

 For A Sole Trader : 

The net profit is the entitlement of the owner and it is accordingly added to capital. Any drawings are deducted from capital 

 However for a Limited Company, a typical Profit And Loss Appropriation Account will look like below:        
     Profit And Loss Appropriation Account for XYZ Limited [...]

Issues of Shares and Debentures

When a company issues shares or debentures, one of the following three (3) scenarios might occur:

Issuance AT PAR
Issuance AT A PREMIUM
Issuance AT A DISCOUNT

Scenarios
  Meaning

Issuance AT PAR
A share or debenture of (say) $1 each nominal value would be issued for $1 each.

Issuance AT A PREMIUM
At a premium a price above the share’s nominal value. For example, [...]

Terms Used In Relation To Share Capital

Terms used in Relation To Share Capital

Authorised Share Capital

Also call Nominal Capital
This is the total amount of share capital stated in the Memorandum of Association that can be offered for subscription

Issued Capital

This is the part of the authorized capital that has been offered to the public for subscription and has been ACTUALLY allotted to the [...]

Long Term Sources Of Funds – Types of Share Capital (Part 2 of 3)

Short- term finance is generally borrowings that repayable within ONE year;
Medium- term finance are those repayable within 2 to 5 years and
Long-term finance repayable after more than 5 years
This 2 nd part article seeks to look at Long term sources of fund which include the following:

Share capital and
Fixed Income Securities

SHARE CAPITAL:
A share is a security [...]