Besides the books of a corporation necessary to record the issues and transfers of shares, there must of course be kept books to record the business transactions of the company. These books, so far as the general business is concerned, are kept the same as for firms not corporations, but differ from them as to the making of the entries affecting capital stock.

When a corporation is formed it falls into one of the following three general classes, so far as the opening of the books is concerned:

1. Shares issued for money only.

2. Shares issued for property or for property and money.

3. Shares issued for property alone, but where working capital is to be provided by the sale of stock donated to the company.

Entries For Class 1

Capital stock $15,000, subscribed for in equal amounts by Chester Hall, Martin Hanson, and Albert Mann, subscriptions to be paid in full in one amount.

The journal entry is as follows:

Subscription, 15000 00

Capital Stock, 15000 00

For shares of stock subscribed as follows:

Chester Hall, Martin Hanson, Albert Mann,

50 shares 50 shares 50 shares

As per subscription list dated.........., 190...

If all the stock is not subscribed for, the capital stock is credited for only the amount subscribed for.

The subscribers having paid in the amounts of their subscriptions, the following entries should be made on the debit side of the cash book:

Subscriptions, 15000 00

Amount paid in by subscribers for stock as follows:

Chester Hall, Martin Hanson, Albert Mann, $5,000 5,000 5,000

It is not necessary to open accounts with the indi-vidual stockholders.

In case the subscriptions are not paid in full, but by assessments, as called for, the journal entry debiting Subscriptions and crediting Capital Stock would be as before, and as each assessment, say of 10 per cent is called for, a journal entry would be made as follows: Assessment No. 1, 1500 00

Subscriptions, 1500 00

Being assessment of 10 per cent on the shares of the company subscribed as follows:

Chester Hall, Martin Hanson, Albert Mann, $500 500 500

As per resolution of directors adopted............,

190... (See Minute Book, page -.)

When the assessment has been paid to the treasurer, the following entry is made on the debit side of the cash book:

Assessment No. 1, 1500 00

Amount paid in by subscribers for stock as follows:

Chester Hall, Martin Hanson, Albert Mann, $500 500 500

This will close the account Assessment No. 1 in the ledger.

Entries For Class 2

When stock is issued at par for property, as the assets of a going business, and other stock sold for cash, the various items are debited, the liability items credited, and Capital Stock credited for the net value of the investment. The stock subscribed for to be paid for in cash is treated as in Class 1.

Entries For Class 3

When stock is issued for property, say a mine, and part of such stock is donated to the company to be sold at par to provide working capital, the entries are as follows:

Mine, 20000 00

Capital Stock, 20000 00

Full explanation of issue. Treasury Stock, 10000 00

Working Capital, 10000 00

Full explanation of donation. When this is sold, make a journal entry crediting Treasury Stock for the par value of the amount subscribed for and debiting Subscription to Treasury Stock for the amount of the subscriptions at the price to be paid, and debit Working Capital for the difference between the price paid and the par value of the stock.

As the subscriptions are paid, debit Cash and credit Subscriptions to Treasury Stock.

If other stock of the company is sold at par, treat it as in Class 1.

If stock is sold at a premium, debit Subscriptions for the amount subscribed for at the price sold at, and credit Capital Stock for the shares at par and Working Capital for the amount of premium.

Every entry should be followed by a full explanation of the transaction.