Accounting Transactions and Financial Operations
Initial Capital Contribution and Share Subscription
A company, SA, is constituted with 500,000 shares at a nominal value of €6 each. The members subscribe to all shares and disburse the minimum statutory amount required.
Accounting Entries:
- €750,000 (Account 572) to (Account 100) €3,000,000
- €250,000,000 (Account 103)
First Dividend Call
After three months, the company’s shareholders require an additional 25% of their commitment.
Accounting Entry:
- €750,000 (Account 558) to (Account 103) €750,000
All shareholders pay the requested liability dividend.
Accounting Entry:
- €750,000 (Account 572) to (Account 578) €750,000
Capital Reduction
The company decides that its capital is excessive and decides to reduce the outstanding liabilities dividend to shareholders.
Accounting Entry:
- €1,500,000 (Account 100) to (Account 103) €1,500,000
Profit Allocation
The benefit of €300,000 has been allocated as follows: Legal Reserve (RL) – minimum required by law (10%), 15% to Extraordinary Reserve (RE), and 20% to Dividends Payable (RV).
Accounting Entries:
- €300,000 (Account 129) to (Account 112) €30,000
- (Account 1141) €45,000
- (Account 113) €60,000
- (Account 526) €165,000
Dividend Payment
The previous dividend is paid through the bank.
Accounting Entries:
- €165,000 (Account 526) to (Account 572) €133,650
- (Account 4751) €31,350
Capital Increase
The company wants to expand its business and increases the capital to 50,000 shares at €6.50 per share. The shareholders subscribe to the new shares. Legal minimum of 25% is paid.
Accounting Entries:
- €81,250 (Account 572) to (Account 100) €325,000
- €243,750 (Account 103)
Second Dividend Call
The company requires shareholders to pay the outstanding dividend liabilities.
Accounting Entry:
- €243,750 (Account 558) to (Account 103) €243,750
All shareholders are requested to pay the cash dividend.
Accounting Entry:
- €243,750 (Account 572) to (Account 578) €243,750
Government Subsidy
The government grants a subsidy of €40,000 to the company to offset its operating deficit.
Accounting Entry:
- €40,000 (Account 4708) to (Account 740) €40,000
Payroll Accounting
Nominees: (Non-Prorated Payments) Monthly Salary: €2,500 + Extra Pay in June: €3,000 + Christmas Bonus: €6,000. Social Security (Employee) = 6%, Social Security (Employer) = 40%, Income Tax: 25%.
Calculations:
- Gross Salary: (€2,500 * 12) + €3,000 = €33,000 + 6000 = €39,000
- Monthly Gross Salary: €39,000/12 = €3,250
- Deductions:
- Income Tax: €2,500 * 25% = €625
- Social Security (Employee): €3,250 * 6% = €195
- Social Security (Employer): €3,250 * 40% = €1,300
Accounting Entries:
- €3,250 (Account 640) to (Account 4751) €625
- €1,300 (Account 642) to (Account 476) €1,300
- (Account 476) €195
- (Account 572) €1,680 (€2,500 – €625 – €195)
- (Account 465) €750
Total Employee Cost: €3,250 + €1,300 = €4,550
Layoff Accounting
Employee Layoff: Started working on 08/01/2009. Laid off in September 2010. Gross Salary: €2,500. Extra Pay June: €750 (€250 * 3 months). Extra Pay December: €4,500 (€500 * 9 months). Total: €7,750. Income Tax: (€2,500 + €750 + €4,500) * 25% = €1,937.50
Accounting Entries:
- €3,250 (Account 640) to (Account 476) €195
- €5,250 (Account 465) (€750 + €4,500)
- (Account 475) €1,937.50
- (Account 572) €5,617.50
- (Account 465) €750
Financial Assets Transactions
05/01/08: Purchased 2,000 shares at €5 nominal value (25% disbursed). Expenses = €90. The company uses the bank for the minimum legal amount.
Accounting Entries:
- 05/01/08: €10,000 (Account 540) to (Account 572) €2,500
- (Account 549) €7,500
- €90 (Account 669) to (Account 572) €90
09/01/08: Remaining 75% requested, to be effective on 10/01/08.
Accounting Entry:
- 09/01/08: €7,500 (Account 549) to (Account 556) €7,500
10/01/08: Payment of the remaining 75%.
Accounting Entry:
- 10/01/08: €7,500 (Account 556) to (Account 572) €7,500
12/31/08: Shares valued at €7.
Accounting Entry:
- 12/31/08: €4,000 (Account 540) to (Account 7630) €4,000
02/28/09: Shares sold for €110 per share, with expenses of €8.
Accounting Entries:
- 02/28/09: €2,000 (Account 540) to (Account 7630) €2,000
- 02/28/09: €15,890 (Account 572) to (Account 540) €16,000
Financial Liabilities Transactions
01/01/10: A bank loan of €250,000 is requested for 5 years.
Accounting Entries:
- 01/03/10: €250,000 (Account 572) to (Account 5201) €250,000 / Check of €25,000 received.
- 01/10/10: €100,000 (Account 572) to (Account 5201) €100,000 / Check of €100,000 received.
- 01/20/10: €150,000 (Account 5201) to (Account 570) €150,000 / Cash deposit.
- 01/30/10: €230,000 (Account 400) to (Account 5201) €230,000 / Bank charges for a provider.
- 03/30/10: €4,250 (Account 662) to (Account 5201) €4,250 / Bank liquidates €4,000 for interest and €250 for commissions.