If the shares debited on the left side of the account are added, and the shares credited on the right side subtracted from them, the number of shares on which there remains an unpaid balance will be found. Smith's subscriptions at present are 125 shares, on which two instalments have already been paid. A comparison of the total debits with the total credits in the monetary columns shows a debit balance of $6,250, which Smith still owes. That balance repre sents the two instalments that he owes on the 125 shares which he at present owns.
14. More than one form of stock ledger possible.— The reader has already been given on page 179 an illustration of a stock ledger. This is not by any means the only form of stock ledger commonly used. Special forms are adopted for use in particular cases. Sometimes a combination of the stock-transfer book and the stock ledger is used, and sometimes a com bination of the instalment ledger and the stock holders' ledger. On page 180 there is an illustration of a common form of stockholders' ledger. The credit or right side of each account shows the total amount of stock issued to the stockholders that they have received. This credit may represent original issues or subsequent acquisitions of stock. The debit side shows any surrender to the corporation or trans fer to others of the stock which he owns. The differ ence between the total of the credit-column "shares" and the total of the debit-column "shares," represents the number of shares owned by the stockholder; and the difference between the corresponding money columns is the par value of those shares. If the latter figures cannot be obtained by multiplying the par of the stock by the number of shares shown by the former figure, there has been an error in the keeping of the books.
Sometimes stock without any par value is issued, but no new complications are involved in such a case. It is evident, of course, that the records should show the value of the property received in exchange for the specified number of shares. In all cases the rec
ord should show just what the stock was issued for. In a close corporation, stockholders' accounts are sometimes carried on the general ledger, but this is rather unusual.
15. Opening entries for corporate books; first illus tration.—There are a number of different ways in which corporate books may be opened. For the pur pose of illustration, let it be assumed that The Pros perous Company was incorporated on January 1, 1916, with an authorized capital of $1,000,000, of which $500,000 was preferred stock and $500,000 was common stock, par value $100 a share. The in corporators subscribed and paid for $50,000 of the common stock, and $100,000 of preferred stock was sold to the public.
The first method starts with a statement of the incorporation and the capitalization of the com pany; in addition, it provides a record of the con tractual agreement entered into between the sub scribers and the corporation, whereby the former agreed to take a certain amount of the stock.
16. Opening entries for corporate books; second illustration.—According to the second method of opening corporate books, the total authorized issue of stock is placed on the books in the form of a ledger account; it will be noted that this method differs from the method illustrated above in this particular re spect. The full authorized stock is offset by an ac count with the unissued stock. Under this method, the amount of stock issued and outstanding at any time will be the difference between the amount stand ing at the credit of the authorized-stock account, minus the amount standing at the debit of the unis sued account. The unissued stock, while it is a debit on the ledger, is not an asset; in the preparation of the balance sheet of the organization, the amount of stock unissued should be deducted from the authorized amount on the liability side of the balance sheet.