How to Write Accounting Entries for Enterprises Issuing Common Shares
Common shares are shares that enjoy common rights and bear common obligations, and are the most basic form of company shares. When an enterprise issues ordinary shares, how to write the corresponding accounting entries?
Accounting entries for issuance of ordinary shares
Debit: bank deposit (actually received amount)
Credit: share capital (par value of shares × total issued shares)
Capital reserve - share premium
What is equity?
Capital stock refers to the capital of a joint-stock company by issuing shares. At the same time, the capital or capital of other industrial and commercial enterprises in partnership can also be called capital stock. In the stock market, people will call the total amount of shares as capital stock, so the company's capital stock can generally reflect a company's registered capital, which is a very important indicator.
What is common stock?
Common shares are shares that enjoy common rights and bear common obligations, and are the most basic form of company shares. The shareholders of ordinary shares have equal rights to the management and earnings of the company. Dividends are distributed according to the company's operating efficiency, which is risky.
The shares enjoying common rights in the company's operation and management, profits and property distribution represent the right to claim profits and residual property of the enterprise after meeting all claims for repayment and the right of return and claim of preferred shareholders. It forms the basis of company capital, is a basic form of stock, and is also the most important stock with the largest circulation. The stocks traded on the Shanghai and Shenzhen Stock Exchanges are common stocks.
What is the capital reserve?
Capital reserve refers to the accumulation fund formed by enterprises due to donations, capital stock premium, legal property revaluation and appreciation in the course of operation. Capital reserve is a credit that has nothing to do with enterprise income but is related to capital. Capital reserve refers to the capital invested in the enterprise by investors or others, the ownership of which belongs to investors, and the amount invested exceeds the legal capital.
What is bank deposit?
Bank deposits are the monetary funds that enterprises deposit in banks or other financial institutions. Enterprises open accounts in their local banks according to business needs, and use the opened accounts to settle deposits, withdrawals, and various revenue and expenditure transfer businesses.