Balance sheet

lgarside Registered Posts: 122 πŸŽ† 🐘 πŸŽ†
Hello I was wondering if someone could explain what happens to the money a share holder has invested.

If for example they have put 80,000 into a failing business to bank role it, this will show on the balance sheet as a liability, but does the shareholder just get repaid once there are some profits? If so what are the accounting entries for this?


  • Emthi
    Emthi Registered Posts: 53 πŸ’« 🐯 πŸ’«

    01. When you put the money

    DR: Bank
    CR: Directors loan

    02. When you draw the money

    other way around
  • AK002
    AK002 Registered Posts: 2,492
    What Emthi said is only true if the shareholder is also a director.
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    Depends whether the funds are being lent or whether it is a purchase of shares/loan notes/debentures..
  • Hasan.Ahmet
    Hasan.Ahmet Registered Posts: 87 πŸ’« 🐯 πŸ’«
    If shares, whether there are sufficient funds on winding up/dissolution to pay back the shares in full.
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