Hi
I have a client company which has 4 Ordinary shares of £1 each. There were two shareholders and one shareholder has now departed (retired), leaving one shareholder. The outgoing shareholder was paid £150k for his shares (I think this is a share buyback by the company?). The company has paid out £150k to the outgoing shareholder which means a credit entry to the Bank in terms of an accounting entry. I am trying to deal with the other accounting entry. The bank has reduced by £150k but I am not quite sure where to post the contra £150k.
My thinkling is that I would debit share capital by £2, leaving me with £149,998 to deal with. Would anyone know where I post this? Would it be debit to Capital Remption Reserve (for how much?) and also Dividends?
Dean
I have a client company which has 4 Ordinary shares of £1 each. There were two shareholders and one shareholder has now departed (retired), leaving one shareholder. The outgoing shareholder was paid £150k for his shares (I think this is a share buyback by the company?). The company has paid out £150k to the outgoing shareholder which means a credit entry to the Bank in terms of an accounting entry. I am trying to deal with the other accounting entry. The bank has reduced by £150k but I am not quite sure where to post the contra £150k.
My thinkling is that I would debit share capital by £2, leaving me with £149,998 to deal with. Would anyone know where I post this? Would it be debit to Capital Remption Reserve (for how much?) and also Dividends?
Dean