Corporations use a share ledger to record the division of ownership in the company. Entries in the share ledger indicate the owners of the corporation and the percentage each owns, as well as any transfers of ownership in the corporation, according to "Entrepreneur" magazine. Share ledgers, which are also called stock ledgers, record initial issuance of stock to stockholders and all subsequent transfers. They include specific data about each transfer and acquisition of stock in a company, such as the class, number, and value of shares purchased or transferred, the names and contact information for each party involved, and the monetary value of the transaction.
Items you will need
- Accounting journals
- Source documents
- Ledger pad
- Computer spreadsheet
- Bookkeeping software
- Audit plan
Consult accounting journals, which provide a chronological record of a company's transactions in the form of a journal entry. Accountants often keep special journals for specific types of transactions, according to Quick MBA, such as payroll, invoices, and the transfer and sale of stock. Each listing in an accountant's journal is called a journal entry. Locate journal entries that record the date of each stock transaction, to whom the stock was issued, the number and value of the shares, and the total value of the transaction.
Confirm share distribution information recorded in the accountant's journal by verifying each journal entry with source documents. Source documents originate and legally confirm all business transactions, according to "Enrepreneur" magazine, such as the issuance or transfer of stock. Source documents include stock certificates, bank records that document payment for shares, and any documentation for dividends paid to the owner of the stock.
Gather the data required by a share ledger from the source documents and accounting journals. Transactions on a share ledger, called "posts," typically include stock certificate numbers, the transaction's date, the shareholder's name and address, the number and class of shares, and the value of the entire transaction. Share ledger posts classify the type of transaction as either a credit or a debit to the corporation. The posts also divide transactions into subcategories based on the type of transaction being recorded, such as stock transfers, stocks issued as part of a benefits package, or preferred stock issued to company executives.
Filling-in the Share Ledger
Label the categories and subcategories for each type of transaction your share ledger will record using a printed ledger pad, a computer spreadsheet or bookkeeping software. In each subcategory, organize each post by the account or shareholder involved in the transaction, then list each transaction by date. At a minimum, ledger posts list the entities involved in the transaction, the value of the transaction, and a brief description of it.
Fill-in each ledger post with data gathered from accounting journal entries and source documents, then update the ledger regularly with new share data. Ledger posts should be commensurate with the volume of business a corporation's accountants record in its journals, according to "Entrepreneur" magazine. Update the share ledger daily, weekly, monthly or quarterly, depending upon the corporation's needs and requirements.
Audit the share ledger regularly -- such as quarterly or once per fiscal year -- to ensure it accurately records and represents the division of stock in the corporation. Compare the data and totals recorded in the ledger's subcategories to the totals recorded by more inclusive categories, then verify those figures with source documents and journal entries. Verified share ledger data can resolve bookkeeping discrepancies, such as errors in keying data in accounting journals and cash accounts. Share ledgers can also identify trends in share ownership and transfer.
Use share ledger data to inform stock ownership and distribution policies, as well as to determine how to pay dividends and make other considerations for stockholders.
Share ledgers help to define a corporation's ownership structure for tax purposes.
- Comstock/Comstock/Getty Images