What account 8330 is for
Charter capital is the monetary total of the funds the founders have put into the company's property (para. 344). Depending on the organisation's legal form, these funds may consist of the participants' units and interests: the constituent documents determine who contributed how much. The state and movement of this capital are kept in 8330 (para. 347).
Under para. 343 of the NAS No. 21 Instructions, charter capital (8300) is kept in three sub-accounts:
| Sub-account | What it is for |
|---|---|
| 8310 "Ordinary shares" | Share capital made up of ordinary shares |
| 8320 "Preferred shares" | Share capital made up of preferred shares |
| 8330 "Units and participation interests" | Units and interests of participants |
A liability account: what that means
In the chart of accounts, 8300 is of type "P" (liability). Under para. 3 of NAS No. 21, in a liability account the balance and increases of liabilities and equity are recorded on the credit side and decreases on the debit side. So:
- charter capital is formed or increased: 8330 is credited;
- charter capital is reduced or a share is returned: 8330 is debited;
- a credit balance shows the total of units and interests under the company's constituent documents.
What goes to the credit side
Under para. 347, after the company is registered, the charter capital is formed from the units and interests set out in the constituent documents: it is recorded on the credit side of 8330 and the debit side of 4610. Table rows by which 8330 is credited:
| Situation | Debit | Source |
|---|---|---|
| After registration, charter capital confirmed in the amount in the constituent documents | 4610 | para. 348, row 1 |
| Part of profit directed to increasing the charter capital | 6610 | para. 348, row 2, sub-row b) |
| Targeted receipt (grant or subsidy) directed to increasing the charter capital | 8810, 8820 | para. 374, row 3 |
What goes to the debit side
| Situation | Credit | Source |
|---|---|---|
| Charter capital reduced to the amount of accumulated capital | 4610 | para. 348, row 3 |
| Return of shares to the founders | 6620 | para. 348, row 4 |
| Debt to a withdrawing founder for their share accrued | 6620 | table in para. 285, row 4 |
Points to watch
- Only by decision of the founders. Under para. 344, an increase or reduction of the charter capital takes place on the basis of the founders' decision and only after changes are made to the constituent documents. Do not change 8330 without a document.
- Charter capital does not exceed the amount in the document. The amount in the accounts cannot exceed the amount in the registered constituent documents (para. 344).
- Each founder separately. Under para. 347, analytical records for 8330 are kept for each founder.
- 8330 versus 4610. 8330 is the capital itself, 4610 is its part not yet contributed. The difference between them shows the contribution the founders have actually made (practical advice).
Main journal entries 7
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 charter capital confirmed in the amount in the constituent documents | 4610 | 8310–8330 | NAS No. 21, para. 348, row 1 |
| Part of profit accrued as dividends (to increase the charter capital) | 8710 | 6610 | NAS No. 21, para. 348, row 2, sub-row a) |
| Profit accrued as dividends directed to increasing the charter capital | 6610 | 8310–8330 | NAS No. 21, para. 348, row 2, sub-row b) |
| Amount of a grant or subsidy directed to increasing the size of the charter capital | 8810, 8820 | 8310, 8320, 8330, 8420 | NAS No. 21, para. 374, row 3 |
| Charter capital reduced to the amount of accumulated capital | 8310–8330 | 4610 | NAS No. 21, para. 348, row 3 |
| Return of shares to the founders accrued | 8330 | 6620 | NAS No. 21, para. 348, row 4 |
| Debt to a withdrawing founder for their share paid | 6620 | 5010–5530 | NAS No. 21, para. 285, table, row 5 |
Example
"Dilnura Savdo" LLC (a fictional wholesale trading company) made the following entries during the year after registration:
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | Charter capital confirmed after registration | 4610 | 8330 | 100,000,000 |
| 2 | By decision of the founders, part of profit accrued as dividends | 8710 | 6610 | 20,000,000 |
| 3 | This amount directed to increasing the charter capital | 6610 | 8330 | 20,000,000 |
| 4 | Return of part of the share to one of the founders accrued | 8330 | 6620 | 10,000,000 |
| 5 | This debt paid from the settlement account | 6620 | 5110 | 10,000,000 |
Sources of the entries: 1 — para. 348, row 1; 2 — row 2, a); 3 — row 2, b); 4 — row 4; 5 — table in para. 285, row 5.
Calculation for 8330:
| Indicator | Amount, soums |
|---|---|
| Opening balance | 0 |
| Credit turnover (1, 3) | 100,000,000 + 20,000,000 = 120,000,000 |
| Debit turnover (4) | 10,000,000 |
| Closing credit balance | 110,000,000 |
Check: 120,000,000 − 10,000,000 = 110,000,000 soums, the total of the founders' new shares. This amount must match the changes in the constituent documents and be visible in each founder's card (example prepared by the author).