What account 4610 is for
Two friends want to set up an LLC: charter capital of 100 million soums, each will pay in their share later. From the day the company is registered, the founders owe it money: the promised contributions have not yet arrived. This debt, who must contribute how much and how much they have contributed, is tracked in 4610.
Under para. 196 of the NAS No. 21 Instructions, this account summarises the current debt of the organisation's founders (shareholders, partners under a partnership agreement and others) for contributions to the charter capital. Group 4600 has one sub-account, 4610.
An asset account: what that means
In the chart of accounts, 4600 is of type "A" (asset): it is the company's claim against the founders. Under para. 3 of NAS No. 21, in an asset account the balance and increases are recorded on the debit side and decreases on the credit side:
- charter capital is declared: a claim arises, 4610 is debited;
- a founder contributes cash or property: the claim decreases, 4610 is credited;
- a debit balance shows the contribution the founders have not yet made.
What goes to the debit side
Under para. 197, when a company is set up, the amount owed by the founders or by those subscribing for shares is recorded on the debit side of 4610 against the charter capital accounts (8300). Row 1 of the table in para. 198: after the company is registered, the declared charter capital in the amount of the participants' contributions (or share subscription) is Dr 4610 Cr 8310, 8320, 8330. Row 1 of the table in para. 348 repeats the same entry.
What goes to the credit side
When a contribution arrives, 4610 is credited; the account debited depends on what was contributed (para. 197). Rows 2–7 of the table in para. 198:
| What the founder contributed | Debit |
|---|---|
| Construction in progress, equipment, fixed assets | 0110-0190, 0710-0720, 0810 |
| Intangible assets | 0410-0490 |
| Long-term and short-term investments | 0610, 5810 |
| Inventories | 1010-2990 |
| Cash | 5010-5530 |
| The contribution withheld from the founder's wages | 6710 |
Other tables also have rows that credit 4610, for example cash paid into the cash desk (5010, 5020 — para. 223, row 7), young animals (1110 — para. 111, row 7) and recording of shares in 6630 once changes to the constituent documents are registered (6630 — table in para. 285, row 7).
Property given in kind as payment for shares is taken into the accounts at the value set in the agreement between the founders (para. 197).
Points to watch
- Each founder separately. Under para. 197, analytical records for 4610 are kept for each founder. Even if the total balance is right, it must be visible who owes how much.
- Cash versus in kind. When cash arrives: Dr 5110 (or 5010) Cr 4610; when property arrives: Dr the property account Cr 4610. In both cases the credit is 4610.
- After registration. Charter capital (8330) is shown, after the organisation is registered, in the amount stated in the constituent documents, and 4610 is debited at that moment (para. 347).
- Check the contribution deadline against the terms of the constituent documents, and at the end of each month reconcile the balance of 4610 with each founder's card (practical advice).
Main journal entries 10
Debit and credit are as in the model table of Appendix 2 to NAS No. 21. The transaction text briefly restates the table row.
| Transaction | Debit | Credit | Source |
|---|---|---|---|
| After registration the declared size of the charter capital recorded as the founders' debt | 4610 | 8310, 8320, 8330 | NAS No. 21, para. 198, row 1 |
| Founder contributed construction in progress, equipment or a fixed asset as a contribution | 0110–0190, 0710–0720, 0810 | 4610 | NAS No. 21, para. 198, row 2 |
| Founder contributed intangible assets as a contribution (payment for share subscription) | 0410–0490 | 4610 | NAS No. 21, para. 198, row 3 |
| Founder contributed long-term or short-term investments as a contribution | 0610, 5810 | 4610 | NAS No. 21, para. 198, row 4 |
| Founder contributed inventories as a contribution | 1010–2990 | 4610 | NAS No. 21, para. 198, row 5 |
| Founder's contribution received in cash funds | 5010–5530 | 4610 | NAS No. 21, para. 198, row 6 |
| Contribution to the charter capital withheld from the founder's wages | 6710 | 4610 | NAS No. 21, para. 198, row 7 |
| Founder paid cash into the cash desk against their contribution | 5010, 5020 | 4610 | NAS No. 21, para. 223, row 7 |
| Young animals received from the founders as a contribution taken into the accounts | 1110 | 4610 | NAS No. 21, para. 111, row 7 |
| Charter capital reduced to the amount of accumulated capital | 8310–8330 | 4610 | NAS No. 21, para. 348, row 3 |
Example
"Dilnura Savdo" LLC (a fictional wholesale trading company) was set up by two founders, Aziza (60 million) and Botir (40 million), with charter capital of 100 million soums. After registration the following entries were made:
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | Charter capital declared after registration recorded | 4610 | 8330 | 100,000,000 |
| 2 | Aziza paid part of her contribution into the settlement account | 5110 | 4610 | 30,000,000 |
| 3 | Aziza contributed the remainder of her share as equipment | 0130 | 4610 | 25,000,000 |
| 4 | Botir contributed part of his share as materials | 1010 | 4610 | 15,000,000 |
| 5 | Part of the contribution of Botir (who works at the company) withheld from his wages | 6710 | 4610 | 5,000,000 |
Sources of the entries: 1 — para. 198, row 1; 2 — row 6; 3 — row 2; 4 — row 5; 5 — row 7.
Calculation for 4610 (by founder):
| Founder | Calculation | Balance, soums |
|---|---|---|
| Aziza | 60,000,000 − 30,000,000 − 25,000,000 | 5,000,000 |
| Botir | 40,000,000 − 15,000,000 − 5,000,000 | 20,000,000 |
| Total 4610 | 25,000,000 |
Check: debit turnover 100,000,000, credit turnover 30 + 25 + 15 + 5 = 75 million soums, balance 25 million soums on the debit side: that is how much more the founders still have to contribute (example prepared by the author).