98 - BULLETIN 985, U. S. DEPARTMENT OF AGRICULTURE. 
‘ 
RESERVE FOR DOUBTFUL ACCOUNTS (H4). 
Debit: | Credit: 
1. With the amount of outstanding | 1. With the amount reserved as accu- 
accounts found to be uncollect- | mulated losses not charged off as 
ible. (Credit accounts receiv- | shown by the balance sheet at 
able.) . the time of opening the books. 
2. With an amount estimated to cover 
the probable losses due to uncol- 
lectible accounts during the fiscal 
period. (Debit loss from bad 
accounts. ) 
Any collections made on accounts which have previously been charged off as worth- 
less should be credited to this account. 
I. NET WORTH. 
CAPITAL STOcK (11). 
Debit: Credit: 
1. With the par value of shares retired 1. With the par value of all shares is- 
or canceled. sued as shown by the balance 
sheet at the time of opening the 
books. 
2. With the par value of all shares 
sold subsequently. 
The capital stock of a corporation is divided into shares, each share usually having a 
designated par value. Theseshares may be transferred from one individual to another 
without affecting the capital of the corporation. The ownership of a share of capital 
stock is evidenced by a stock certificate. 
In organizing a corporation, a subscription list should first be prepared, the signers 
of which by law bind themselves to purchase the number of shares subscribed. No 
certificate of stock should be delivered to a stockholder until his subscription has been 
fully paid. Until such payment is madea temporary certificate may be given to the 
subscriber to be exchanged for the regular stock certificate on completion oi payment. 
When a subscription list has been prepared and the corporation formed on this basis, 
it is often provided that the subscription may be paid ininstallments. Itis not desir- 
able to credit these partial payments direct to the capital stock account. In view 
of this, when the subscription list has been completed an entry should be made debit- 
ing ‘‘Subscription account” and crediting ‘‘Capital stock”’ account for the amount sub- 
scribed. When payments of the subscription are made, either by cash or note, in — 
full or in part, these payments should be credited to ‘‘Subscription account” and not 
to ‘‘Capital stock” account. The following entries will illustrate: 
Debit. 5) © Credit. 
$10,000.00 Subscription account. 
Caprialastockt ... ... 8). Sinaia be baa $10, 000. 00 
For subscriptions shown on subscription list No. 1. 
Debit. Credit. 
$4,000.00 Cash. 
1,000.00 Notes receivable. ; 
Subsch pivenaccount.)- oof esr eS eee $5, 000. 00 
50 per cent payment of the following subscriptions: 
(List those making payment.) 
