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CLASSIFICATION OF LEDGER ACCOUNTS FOR CREAMERIES. Past 
DEBIT CREDIT. 
_. $10, 000 Subscription account. 
GapirkepLoc lotr mee sine ig ke AS Sees $10, 000 
For subscription shown on subscription list No. 1. 
DeEBIT. CREDIT. 
$4,000 Cash. 
1, 000 Notes Receivable. 
Subscription account.....-- mie 32 Bak ere | areas $5, 000 
50 per cent payment of the following subscriptions: 
(List of those making payment.) 
In case the entire capital stock is paid at one time, the following method might be 
used. 
Entries to illustrate issue of capital stock and payment thereof: 
DEBIT. : CREDIT. 
$8,000 Cash. 
2,000 Notes Receivable. 
Caprial: Stock t a2 Matias Fi ei SBS eS ars $10, 000 
(Representing payment of capital stock issued to the following:) 
When shares of stock are acquired or sold for more or less than par value, the prem- 
ium or discount should be charged or credited as the case may be to Premium and 
Discount on Capital Stock account. For example, if a going concern desires to sell 
additional shares, the shares being above par in value, an entry should be made as 
follows: 
DeBIr. CREDIT. 
$105 Cash. 
Capitalll Stock si OF Bl s Et See eae $100 
Premium and Discount on Capital Stock........ 5 
(For sale of one share of stock at $5 premium.) 
Likewise, if shares were sold at a discount, there would be a debit to Premium 
and Discount on Capital Stock. 
The balance in this account should be written off into the Surplus account by 
periodical charges usually extending over a term of years. 
It occasionally happens that capital stock is offered for sale, and is purchased by 
the organization, to be held for resale at some future date. While this transaction 
may seem to resemble closely a retirement of the capital stock so purchased, and 
as such chargeable to the Capital Stock account, accountants generally have preferred 
to charge a purchase made in this manner to an account called Treasury Stock. In 
case the purchase was made above par, the entry should be: 
DEBIT. CREDIT. 
$105 Treasury Stock. 
STS SN es oe ot aa eg ts ee $105 
(For purchase of one share of stock from Chas. Brown at $5 
premium. ) 4 
When Treasury Stock is sold, the total amount received from such sale should 
be credited to the Treasury Stock account. Although it is not incorrect to charge 
the par value of this purchase to Capital Stock, it is a procedure not to be 
recommended. 
In case the organization is not a corporation, but a partnership, sole ownership, or 
association, the Capital Stock account would be replaced by accounts indicating the 
ownership, membership, or amount of certificate of indebtedness outstanding. 
