Accounting Entries Used In Capital Reduction Where Capital Is Not Represented By Available Assets(Part4)

Published by slang December 1st, 2007 in Co. Reconstruction

Earlier article discussed what caused a capital reduction in a company.

In this article, we see step by step the accounting entries used in a capital reduction situation where the companys capital is not represented by its available assets.

Accounting Entries Used In Capital Reduction Where Capital Is Not Represented By Available Assets

(1) Being Amount Written Off From Share Capital Account
	Debit	Credit
Share Capital Account	XXX
Capital Reduction Account		XXX

(2) Being Reserves Utilized For Capital Reduction Scheme
	Debit	Credit
Reserve Account	XXX
Capital Reduction Account		XXX

(3) Being Amount Written Off From Accumulated Losses
	Debit	Credit
Capital Reduction Account	XXX
Profit & Loss Account		XXX

(4) Being Amount Written Off On Assets On Revaluation
	Debit	Credit
Capital Reduction Account	XXX
Various Relevant Assets		XXX

(5) Being Surplus Upon Revaluation Of Assets
	Debit	Credit
Various Relevant Assets	XXX
Capital Reduction Account		XXX
(6) Being shares issued to settle liabilities
	Debit	Credit
Various Relevant Liabilities	XXX
Capital Reduction Account		XXX
(7) Being new shares issued in lieu of preference dividends in arrears
	Debit	Credit
Capital Reduction Account	XXX
Share Capital Account		XXX
(8) Being expenses incurred during the Capital Reduction.
	Debit	Credit
Capital Reduction Account	XXX
Cash/Bank Account		XXX
(9) Being difference(rounding) re: net credits transferred to Capital Reserve Account.
	Debit	Credit
Capital Reduction Account	XXX
Capital Reserve Account		XXX

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