Accounting for Share Capital

[antonycc]

Hello,

>> Do your changes need to be done by everyone using the package or just those issuing extra shares of an established company?

The formula changes are just for those who want to tidy up the balance sheet. When you file online you'll be entering the raw data for numbers of share holders and total share capital so you can skip this bit.

The Entries in the Trial Balance are for the first time you set up the share capital. Most small companies don't do a lot of raising funds through share capital generally most of our customers would fund an expansion with a directors loan or a business loan.

>> I have a company in its first year with £1000 paid in by cheque at creation with the intention that this would be accounted as 1000 x £1 shares.

OK.

>> I've entered 1000 into E6 & E8 CompSec | BoardMeeting and updated the Reg of members.

It's just the Register of Members sheet you'd complete for the formation of the company, clear out the Board Meeting sheet until your board meeting at year end.

>> This now appears as £1000 in YearEndAccounting of CashAccount EH25 and -£1000 in ShareCapital EH42. I don't understand the CashAccount entry.

The trial balance pulls an entry directly from the Board Meeting sheet and this appears as Cash At Hand. You'd use the Board Meeting sheet if at the end of the year more share capital was injected.

>> Could you give an easy explanation of how share capital should appear in the accounts?

First we use one of the bank sheets to receive the funds. - There isn't a code for share capital so I suggest you enter it as a directors loan.

Currentaccount.xlsx > [Month] > E6: DL
Currentaccount.xlsx > [Month] > F6: 1000

Once the funds are in we manipulate the trial balance to switch the funds from a directors loan to share capital.

Unprotect Financialaccounts.xlsx > Trial Balance
Financialaccounts.xlsx > Trial Balance > M39: 1000
Financialaccounts.xlsx > Trial Balance > M42: -1000

What you've just done is:

• Processed a cheque as a Director's Loan received
• Paid off the Directors Loan (credit 1000)
• Added a liability to the shareholders (debit 1000)

Thanks,

Antony.

[nd4spd]

Hi I am a bit lost if you could help with the entry... ? company incorporated 28/05 £1 share paid cash £1.. I have filled all the details in company secretary file.. I bought the financial accounts package april to march.. but the accounts are short uptil march.. !!! (No info in april)

[antonycc]

Hello,

The package for a March Year End, would start in April and end in March. For a new company the first month would start at zero for everything except the share capital.

The previous post gives the shortest additional steps for aligning the bank balance with the share capital assuming you banked it. If you didn't bank the share capital you can use the cash book instead.

Thanks,

Antony.

[petero]

Stuck on Called up share capital on the online CT600 form which is coming up with this flag:
X ERROR:Total share capital must equal the value entered into AC70 on the balance
sheet. Please check your figures and amend as necessary.
_____
However I have entered 1 x £1 share in AC70 so why is this a problem?
Anthony, I know you did not write the HMRC code! but always grateful for your support.

[antonycc]

AC70 (Called up share capital) should match the value that comes out of the calculations in the "Called up share capital" section of the Statutory Accounts Notes. (Boxes AC280 through AC 286) This section in turn comes from the Company Secretary sheet in DIY Accounting.

For most customers...
Called up share capital = Ordinary Shares Issues * Value per share

First check that the share capital in the Balance Sheet in Financial Accounts matches what's in the company secretary file. Then sync up HMRC's PDF which what's in the online filing look-a-like.

Thanks,

Antony.

[danoday]

I am wondering whether share premium accounts and called up share capital is classed as an asset or a liability and where they get recorded on a balance sheet.
if someone could help i would be ever so grateful.

[antonycc]

Hello,

Share capital is liability (from the company to the shareholder). Normally there is a share capital line item on the balance sheet.

I would expect the actual funds backing a share premium account to be held as a current asset and these would feed into cash at hand.

Thanks,

Antony.

[davezan]

hi all, i am new to this site so be nice.
I am wondering whether share premium accounts and called up share capital is classed as an asset or a liability and where they get recorded on a balance sheet.
if someone could help i would be ever so grateful....

[antonycc]

Hello,

The cash in the share premium account would be a current asset and the share capital its self is a liability (the debt from the company to repay the share holders).

The cash from the share premium would be in the current assets section and share capital in the capital and reserves section.

If a company had no activity other than the paying in of share capital, the Net Assets would only include the invested cash and shareholders funds would only include the share capital making both equal.

Thanks,

Antony.

[petero]

Am I correct in my assumption that in the case of shares issued and sold to investors, the nominal value of the shares; e.g. £1 shares, is just that, nominal and the amount of the investment is something else entirely.

Put in an example if the company issued 100 £1 shares , and an investor wished to invest £5000 in the company, what share allocation would the company offer?