Accounting Treatment Of Trading stock or Private Equity Fund In QuickBooks – Journal Entries For Share Purchased, Dividend, Disposal or Sales Of Shares, & Revaluation of Shares
Trading stock or investing in shares is an activity that involves buying a share of a company’s capital with the purpose of being a part owner of the business. The reward for share purchases or private equity investment could be price appreciation and/or dividend distribution.
While the former (share price appreciation ) happens when the company’s quoted price in the stock market increases as a result of demand outweighing supply, the latter is the proportion of the profit earned for the period which is payable on a quarterly or annual basis.
Request For Our Accounting Software ServiceFor over 5 years, we have implemented QuickBooks and Sage 50 for several companies under Retail, Manufacturing, Oil & Gas, Real Estate & Construction, Travels, Hospitality,Legal, Co-operatives, NGOs, Financial & Service Sectors.
- Mbaire Services Nigeria Ltd(Construction)
- Chisco Transport Limited(Transport)
- Lounge38(Hotel and Bars)
- CTRL System Technologies Limited(Procurements)
- Aristokrat 360 Limited(Creative & Media Agency)
- Alpha Pharmacy (Health Care & Supermarket)
- Ericsson Nigeria Multipurpose Co-operative Society (Co-operatives)
- Fastanet Limited (ICT and Security)
- Britanic Maritime (Maritime Service)
- CEO Business Limited (Salary Advance, Credit Finance and Loan)
- OneHealth Pharmacy (Health Care)
- Widdi Pharmacy (Health Care)
- Olpharm Pharmacy (Health Care & Distributor)
- Hawkes Legal(Legal)
- Kantessa Limited(Fashion Store)
- OPI Nigeria International Limited (Oil & Gas Servicing)
- Zenilum Company Limited (Oil & Gas Servicing)
- Extol Security Services Limited (Security and Guard Services)
- Lilygate Hotel(Hospitality)
- Benstel Nigeria Limited(Bottle Water Production & Distribution)
- Paraclete Nigeria Limited (Bottle Water Production & Distribution)
- Lakia Construction Limited (Real Estate Development)
- Josien Holdings Limited(Distribution)
- Aisha Buhari Foundation (Futured Assured)(NGO)
- Doheney HR Services(HR)
- Insights Limited(Health Consultant)
- Biddel Oil & Gas Limited (Oil & Gas)
- System Intelligenz Limited(Contractor)
- MagTech Information Security (IT)
- Infusion Cakes Nigeria (Bakery)
- SCERA Nigeria (NGO)
- M.D School (Private School)
- Travel Options (Travels)
- Logos Travel Support & Solutions Ltd (Travels)
- Melcurt Nigeria Limited (Oil and Gas Engineering and Pipeline Construction)
- Starlight Nigeria (Retail)
- Temple Private School (Education)
- Value Mart Supermarket (Retail)
- Transweb Bureau De Change (Financial Service)
- Vektro Food Limited (Manufacturing & Retails)
- Orient Petroleum PLC (Oil & Gas)
- Plus More
Private Equity Fund, on the other hand, is a type of mutual funds that mobilise funds from interested top-level investors for the sole purpose of investing in private equities; shares not quoted in the stock exchange market. They are most start-ups or growth businesses with good product/market fit but are looking for additional equity investment or cash injection from a venture capitalist or angel investors.
Whichever one you are, this guide will help you understand how to treat various shares or private equity investment transactions in your books of account.
Share Purchases or Private Equity Investment
When you acquire a certain equity stake in a company or make an order for new shares at a specified or agreed market price, the accounting entries in your book is CR your bank account and DR your investment account with the value of the equity shares.
For Dividend Received on Share Holdings
The dividend earned on the equity shares is an income which is a profit or loss item. On receipt of your dividend, CR the dividend income account and DR the bank account with the actual cash paid. The same entries also apply to income earned or return on investment in equity shares of a private company.
When a share is disposed or sold to another investor, you need to compare the value of your shares as at purchase date against the market value (amount paid by the buyer). This will help you compute profit or loss on sale of an investment.
Here are entries to the disposal of private equity or sale of shares.
DR your bank account with the actual amount received from the sale of shares, CR your investment account with the market value and Cr your profit on disposal ( or DR loss on disposal).
Revaluation of Shares
This is a result of the daily fluctuation in the price of your equity holding in a publicly listed company. When the market value (which is the price per share multiplied by a number of shares owned) is above or below the cost of investments, it gives rise to unrealised profit or loss figure, to be treated your book. For profit, DR investment account and CR revaluation account while the reverse is applicable on a loss.
Hope you find this accounting treatment for stock trading or private equity fund transactions useful? Read more tips on accounting treatment for business transactions here
Recommended QuickBooks Software With Genuine License Details, It's One-Off:
Order Now, Call 08105090001, 08084219399 or mail at email@example.com
QuickBooks Premier – 1 UserView Price Offers
QuickBooks Premier – 3 UsersView Price Offers
QuickBooks Premier – 4 UsersView Price Offers
QuickBooks Premier – 5 UsersView Price Offers
QuickBooks Premier – 2 UserView Price Offers
QuickBooks Pro – 1 UserView Price Offers
QuickBooks Pro – 2 UsersView Price Offers
QuickBooks Pro – 3 UsersView Price Offers