Sale of capital stock to another stockholder

[Asiabiz]

Hi Folks,

In my small corporation of three stockholders, one stockholder has sold his stock to one of the others. On the balance sheet under Equity, there are entries for Opening Bal Equity and Capital Stock, with dollar values for the capital stock of each stockholder.

For the Capital Stock entries, how do I decrease to zero the amount listed for the one one stockholder and add the sold amount to that of the other stockholder, with a transaction that will show the date of the sale? I have tried to decrease and increase the respective amount in the register, but I'm prompted for an expense account for each.

I'll be grateful for your guidance.

[Joey]

When one shareholder sells his stock to another shareholder, there is no entry made on the company books at all. Those are personal transactions between those two people that have nothing to do with the profit and loss of the business.
Once you issue the original stock and record the issued stock's Par Value on the books. You're done with the stock entries unless the company actually issues NEW stock to someone else.
The shareholder who sold the stock will report a sale of stock on his Schedule D Capital Gains & Losses in his personal tax return. It's no different if he sold IBM stock or any other stock.
As far as your setup, you only need to have one Capital Stock account with the total of the issued stock's par value in it. If you want to keep it divided like it is, make a journal entry to Debit the one who sold the stock and Credit the other guy's Capital Stock for the balance in the account.

[MalcomWagon]

When one shareholder sells his stock to another shareholder, there is no entry made on the company books at all. Those are personal transactions between those two people that have nothing to do with the profit and loss of the business.
www.madpennystocks.com